Accessing more remote areas of New Zealand without a car can be difficult. You want to make the most of your time in this beautiful country and take in as many of the sights and experiences as you can. However, doing so without a car may be prohibitive, and as a temporary resident in New Zealand, it may seem as if a car loan is out of reach.
The good news is that some lenders are willing to offer car finance to those with a work visa in New Zealand. Some lenders view this type of loan as a high risk one, so the key is knowing which lenders to approach and what their lending criteria is. Read on to find out how to apply for a car loan while holding a work visa in New Zealand, and how to maximise your chances of success.
On a work visa? These lenders will still consider you
How does a car loan for a work visa holder work?
A car loan for a temporary resident is essentially the same as any other car loan or personal loan, except that lenders impose additional stringent eligibility criteria.
The bank or other lender lends you the amount of money needed to purchase a car, and you enter into a contract to make repayments on the principal amount and the interest at regular periods over a set number of years. Regardless of your status in New Zealand, the lender may have requirements about the type or age of car purchased with the loan. For example, a lender is unlikely to extend a car loan to purchase a car more than a few years old, or a car that has been in an accident.
As a work visa holder, additional lending criteria and other considerations apply, including:
- Loan term. While a typical loan term for a car loan is five to seven years, a lender is not going to extend a loan term past the validity of your current visa. For example, your the loan term may end least three months before the expiration of your visa. Note that lenders only consider your current visa and do not rely on pending visa applications or extensions, no matter how likely their success.
- Visa type. Some lenders only extend credit to temporary residents holding certain types of visas. For example, people with student visas and temporary work visas with a path to permanent residency have a greater chance of success than someone on a provisional or interim visa. If your visa has been sponsored by an employer, this may improve your chance of success.
- Credit history. For Kiwi citizens, lenders look at an applicant’s credit history when considering a car loan application. Work visa holders typically have little or no credit history in New Zealand. For this reason, lenders place more emphasis on an applicant’s deposit, income and employment status. However, it may help if you can provide credit history from your home country, as having additional proof of that you can meet the terms of a loan may assist your application.
- Visa breaches. Work visas may have limitations on the type jobs that can be held or the number of hours of employment each week. While it is important to maximise your income before applying for a car loan, loan providers do not lend to anyone in breach of the conditions of their visa by working extended hours or prohibited jobs.
How do I know if I am eligible for a car loan?
The lending criteria for a car loan for those with a work visa varies between lenders. As always, it is essential to consider the criteria of an individual lender before applying.
As with all car loans and personal loans, different lenders have varying requirements in relation to income, employment history, loan terms, deposits and lending amounts. However, of particular significance to temporary residents is that some lenders do not offer car loans to temporary residents at all, while others only consider temporary residents holding certain visas. Additionally, lenders have different criteria regarding how long you have been in New Zealand, how long you intend to stay here and your employment stability.
How can I increase my chances of being accepted?
Loans for work visa holders are considered a high-risk endeavour for lenders. Once you satisfy the eligibility requirements, you can improve your chances of being accepted by considering the following factors:
- Cash deposit. The greater the deposit you can offer, the greater your chances of success.
- Proven savings. If you can show that your cash deposit is a result of your saving efforts while working in New Zealand, this is more favourable to lenders than if your deposit was a gift.
- New Zealand driver’s licence. Some lenders may require you to have a New Zealand driver’s licence for you to be granted a loan.
- Regular income. Lenders need to be satisfied that your employment is stable and your income is regular. In some cases, lower regular income is more favourable than intermittent or seasonal income, even if it is higher.
- Guarantor. If you can find someone who is prepared to be a guarantor for your loan – to agree to be responsible for the loan should you default on the repayments – this is looked upon favourably by lenders.
- New Zealand bank account. Most lenders want to see that you have a New Zealand bank account into which your income is deposited. Be prepared to provide bank statements for at least the last three months.
How do I submit my application?
Most lenders allow applications for car loans to be completed online, which makes it a simple and easy process. On the other hand, since there are more stringent requirements for visa holders to obtain finance than for Kiwi citizens or permanent residents, an online application is not always a good idea.
Every time an application for credit is made, this is noted on your credit history. Making too many applications within a short period can negatively affect your credit history – and this is particularly significant for temporary residents who may have little to no existing New Zealand credit history.
It can be a good idea to do the groundwork first and work out which lender could be the best choice based on your circumstances. Then, make an appointment to speak with a car loan officer at your chosen bank or financial institution.
Lenders do have a certain amount of leeway when it comes to deciding whether to extend credit to a work visa holder. For this reason, an in-person appointment gives you the opportunity to state your case and show that you are a good candidate for car finance – something that is not possible with an online application.
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