Low interest rate car loans

Keep your repayments down with a low-interest car loan. Compare below.

You don’t have to spend big to get a bit of help buying a car. When it comes to choosing a loan, you want to get the lowest interest rate possible. Low-interest rate car loans are available from banks, credit unions, brokers and dealers in the form of dealership finance.

It pays to compare your choices when it comes to car loans, so have a read of our guide and find out how to get a low-interest rate loan for your new or used car today.

Some low interest car loans available on finder.com/nz

Name Product Interest Rate (p.a.) Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee
Lending Crowd Car Loan
6.49% - 16.78%
3 or 5 years
$250 - $1,450 depending on the amount borrowed
Borrow $2,000 to $200,000 for your chosen vehicle. Eligibility: Be an 18+ NZ permanent resident, earn $30,000 or more, have a good credit history and collateral/security.
Simplify Secured Car Loan
6.50% - 14.50%
12 - 60 months
$100 - $500, depending on loan amount, lender and term
Secured vehicle finance from $5,000 to $500,000. Eligibility: Must be 18+, a New Zealand resident or permanent citizen and have an income of at least $500 per month.
CarPow Car Loan
8.95% - 23.95%
Up to $495
CarFinance2U Car Loan
8.95% - 23.95%
1 - 5 years
With a CarFinance2U Car Loan you could get pre-approval for your next car in 30 minutes. Eligibility: Be at least 22 years old, have a valid NZ driver's licence and be and NZ citizen or permanent resident.
Nectar Car Loan
8.95% - 29.95%
6 months - 4 years
Oxford Finance Vehicle Loan
12-60 months
Swoosh Finance Car Loan
9.95% - 18.95%
Up to 5 years
Borrow up to $100,000 with a quick turnaround time upon approval. Working visa and beneficiary applicants accepted.
QuickLoans Car Loan
9.95% - 23.95%
Up to 5 years
$95 - $595 depending on loan size
Borrow up to $20,000 with collateral/security and apply online within 5 minutes.
Stadium Finance Secured Vehicle Loan
9.95% - 19.95%
Up to 60 months
Secured loans from $3,000 and funds paid within one day of approval. Eligibility: Must be 18+ and earning at least $500 per week
Admiral Finance Car Loan
13.95% - 23.95%
6 months to 5 years
$125 - $595 depending on loan size
A secured car loan from $1,000 to $50,000 with a quick online application process.

Compare up to 4 providers

What you should know about the advertised low-interest rate on car loans

Just because you see a low-interest rate advertised for a car loan with one particular lender, don’t automatically think that’s how much you’ll end up paying.

Those ultra-cheap interest rates may only be available to you if you have good credit or are buying a specific type of car. For example, those rates may only apply to loan amounts over $30,000 or have other specific criteria that you need to meet.

Therefore, if you’re buying a car that is two years old and you only want to borrow $21,000, you may pay a slightly higher interest rate than the one you saw advertised. In this situation, it’s essential to find out whether your car loan has a balloon payment option, as this may help keep your repayments down.

Five ways to get the lowest rate car loan

1. Be in stable employment

Low Interest Rate Car Loan GraphRegularly changing employer demonstrates a level of instability to your bank. By comparison, if you’ve held down the same job for several years or only changed employment irregularly, the bank is more likely to view you as a financially stable customer.

2. Have a good credit history

When you apply for finance through a lender, your enquiry is listed on your credit report. As long as you keep up with your repayments, your credit report won’t show any adverse listings. You’re far more likely to get a good deal and a cheaper car loan with a good credit history.

3. Offer a deposit

There are plenty of lenders out there willing to lend you the entire purchase price of a car, plus fees. However, if you can provide a deposit from your savings or in the form of a trade-in, you create equity in your asset, which means you borrow a smaller amount of money and therefore reduce your repayments.

4. Shop around

You should never accept the first low-interest car loan offer you see. Always take the time to look around and compare what else is available. Be prepared to ask questions about the loan term and whether the rate is fixed or variable. You’ll be surprised at some of the great deals available on low rate car loans when you do your research.

5. Negotiate

Regardless of which lender you approach for your low rate loan, you can negotiate a discount on your interest rate and ask if the lender can waive the fees. If you’ve already done some comparison shopping and know what other lenders are offering, you can use this information as ammunition to strengthen your negotiations. If a lender is genuinely keen to win your business, they’ll discuss a cheaper car loan with you.

How to find the right low-interest rate car loan for you

There are a variety of factors to take into account when finding the right low-interest car loan for you:

  • How old is the car you want to buy? The age of the vehicle determines the type of low-interest loan for which you’re eligible. Some lenders only lend to borrowers if you’re buying a new car, which is typically a car under two years old. Used cars may be up to seven or ten years old (older with some lenders). You may need to buy a car over the specified age with an unsecured personal loan.
  • What are the interest rate and loan term? From there, you can compare the interest rates available to be sure you don’t end up paying more than you should. Be sure to consider the upfront and ongoing fees, as these add onto the cost of your low-interest rate car loan. Always take the time to input the numbers into a good car loan calculator. Check out your monthly repayments over a three-year term and a five-year term. Some lenders also offer seven-year terms, so you can consider this too.
  • How much will you pay? You’ll notice that your payments each month are cheaper if you choose a longer loan term. However, you should be aware that you’ll end up paying a lot more interest over this term than you would if you paid your loan off faster. Work on a term that best suits your budget and the amount you can comfortably afford to repay each month. Some lenders may also offer you the option of a residual payment at the end of the loan term, which is also called a balloon payment. These types of low rate car loans can reduce your ongoing repayments, but bear in mind that the balloon repayments may be in upwards of $5,000.

Loan repayment calculatorResidual Payments

Simone wants to borrow $25,000 to buy a new car but doesn’t want her repayments to go over $400 per month. She sets her loan term to five years to keep her payments at $400 per month, but she will still have a remaining $10,000 due at the end of the five-year term.

Simone can choose to pay this by refinancing her car loan’s outstanding balance with her current lender, or a new lender, and pay off the remainder over the next few years.

She also has the option to trade in her car and buy something else. If Simone’s car is worth around $15,000 when she trades it in and buys something else for $25,000, she’ll end up with a new car loan of $10,000 to repay.

What does a lender charge for a low-interest rate car loan?

Low-interest car loans come with a few charges, but each loan may differ depending on the provider. Here is a breakdown of some fees to watch out for:

  • The establishment fee. This fee is the cost to set up your low rate car loan. Lenders may add the establishment fee onto your loan amount, and you pay it off with the principal.
  • Other monthly fees. These are ongoing costs for the maintenance of your account.
  • Any early exit or early repayment charges. If you repay your loan early, the provider may charge you this penalty to cover the loss of interest.
  • Any additional repayment fees. If you make extra repayments, the lender may charge you a fee.
  • Late payment costs. The loan provider will charge you for late and missed payments. Ensure you make your payments on time to avoid this.

What type of vehicles are low rate car loans ideal for?

Lenders don’t view all vehicles the same way. As a lender needs the ability to recoup its losses, by selling the car if you default on a loan, a newer car is preferred. New car loans tend to attract lower rates than used car loans.

Lenders may typically define “a new car” as a vehicle under two years of age. You can also find lenders that finance used cars, but it may need to be under a specific age, eg ten-years-old when you buy it or need to be under a certain age at the end of the loan term.

Five- vs seven-year loan term

Let’s assume you want to borrow $20,000. Over a five-year term, the lender might quote you an 8% p.a. interest rate, but it offers a 7.5% p.a. rate if you accept a seven-year loan term.

Low-interest loan detailsLoan option 1Loan option 2
Loan amount$20,000$20,000
Loan termFive yearsSeven years
Interest rate8%7.5%
Monthly repayment$405.53$306.77
Total interest paid$4,331.80$5,768.68

In this example, you’re paying 8% p.a. on the five-year loan term, so your repayments are $405.53 per month. You end up paying $4,331.80 in interest charges over five years.

By comparison, if you take the cheaper interest rate at 7.5% over a longer seven-year loan term, your repayments are almost $100 per month less at $306.77, which can be an appealing option as it’s more budget-friendly. Unfortunately, even with the cheaper interest rate, you end up paying more than $1,436 in additional interest charges.

One option you have is to make extra repayments to pay off your low-interest rate car loan sooner, while also taking advantage of the cheaper interest rate. However, it’s essential you check if the lender charges an early repayment fee that may wipe out any saving you thought you were making.

What other factors influence interest rates?

Buying a brand new car might get you a lower interest rate, but if you don’t want a new one or your budget more suits a vehicle that’s already a couple of years old, you need to look for other things that can influence the interest rate you pay.

Whether the low rate car loan is secured or unsecured

A secured car loan may come at a cheaper interest rate than an unsecured loan, which is because the bank can use your car as a guarantee for a secured loan if you default.

Whether the interest rate is fixed or variable

Some banks offer both fixed rate car loans and variable rate car loans. You may find the variable rate is cheaper than the fixed one because it might fluctuate throughout the loan term.

The loan term

Some lenders out there offer lower rates for longer loan terms. For example, if you agree to extend your loan term to seven years instead of five, you could find your interest rate drops a little.

Don’t automatically assume that a lower rate means a cheaper car loan. It’s essential to work out your total cost over the entire loan to be sure you’re receiving the best car loan deal.

Whether the loan is full-doc or low-doc

If your loan application demonstrates that you have a stable employment history and you can provide payslips to verify your income, you’re likely to qualify for a low-interest rate car loan. However, if you’re self-employed and can’t prove your income with payslips or tax returns, it’s likely you’ll pay a slightly higher rate with a low-doc loan.

Your credit history

If you see a low-interest rate car loan advertised, but you have a bad credit history, it’s likely you won’t qualify for those rates. Your cheap car loan search is usually limited to lenders that offer bad credit products.

If the loan comes with additional features

Some lenders include extras on top of your loan repayment, which might consist of loan insurance premium payments, where you pay for a policy that covers you if you can’t keep up with repayments. These features can increase the amount you have to pay each month but don’t go towards your car loan balance.

If there are brokerage fees

If you get your low-interest rate car loans through a broker or a finance officer at the car dealership, you might also have to pay brokerage fees on top of other finance costs. With some brokers, you may pay that as a percentage of the amount you’re borrowing, eg 4% or it could be a set charge, eg $500.

Always check what fees providers charge on your loan and wherever possible, ask for the lender to reduce them. If the broker or finance officer doesn’t decrease them, shop around elsewhere for a better deal. When considering low-interest car loans, remember to compare all your car loan options before you apply.

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