Like home loan lenders, car lenders specify in offering you deals to help you cover the total cost of a car. With many car lenders to choose from in New Zealand, you can compare different lenders based on their advertised rates and their benefits, including leasing, security, loan discounts, or insurance benefits.
Each option comes with its own risk, but generally, they help reduce the overall owing amount and the length of time you have to borrow.
Banks and credit unions.
One lending option that will generally require a deposit or security first is using a bank or credit union lender. They have pre-approved loans, which let you know what you can borrow in advance. Depending on their lending policy, they’ll also have high credit report standards for beginning a loan.
Car dealers may also offer loans through a third-party financing company. They’ll set the loan repayment as part of the purchase in this arrangement.
Car leasing and contracts.
Under these agreements, you ‘borrow’ the car and pay off its value over a specific time. At the end of your borrowing period, you can decide to buy the vehicle outright.
A personal car loan is what people generally think about with loans. Under a personal loan, you agree to borrow a certain amount, based on your credit score and lending ability, to be repaid over time.
Like personal loans, a guarantor loan has a third party who acts as an assurance if you can’t repay. If you have a bad credit score or repayment history, lenders may require a guarantor or another form of security, such as an asset, to use against your loan.
Homeowners may choose to extend their mortgage to pay for a car loan, borrowing against their house at the lower mortgage rate. A mortgage extension may end up costing more overall.