Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

Unsecured car loans

Obtain the funds you need without restrictions on the type of car you can purchase with an unsecured car loan.

Updated . What changed?

Fact checked

If you want to purchase a second-hand car; wish to use the loan amount to pay for something in addition to your vehicle, or you don’t want the risk of attaching your vehicle as security to a loan, an unsecured car loan may be an option. An unsecured loan lets you borrow funds for a car of your choosing, as well as any other legitimate purpose, without attaching your vehicle as security. Find out more about this loan and whether it’s right for you by reading our guide below.

Unsecured car loans comparison

Name Product Interest Rate (p.a.) Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee
The Lending People Car Loan
6.99% - 26.99%
1 to 7 years
$50 - $695 depending on lender
Eligibility: Be 18+, an NZ citizen or permanent resident, in employment and earning at least $500 per week.
Secured and unsecured car loans of up to $75,000 from a variety of reputable lenders.
CarFinance2U Car Loan
8.95% - 23.95%
1 - 5 years
Eligibility: Be at least 22 years old, have a valid NZ driver's licence and be and NZ citizen or permanent resident.
With a CarFinance2U secured or unsecured car loan you could get pre-approval for your next car in 30 minutes.
Nectar Unsecured Car Loan
8.95% - 29.95%
6 months - 4 years
Eligibility: Must be 18+, an NZ citizen or permanent resident, have an income of $400 per week or more (after tax) and a stable credit history.
Unsecured car loans from $1,000 with payouts made within one day of approval. Applications entirely online.

Compare up to 4 providers

Is an unsecured car loan right for me?

An unsecured car loan is an option to consider in a few situations:

  • You’re purchasing an older or second-hand car. Secured car loans come with restrictions regarding the type of vehicle you can use as security. Limitations typically include a maximum age limit, which can extend up to 12 years with some lenders, longer with others (Kiwibank), that the car is in good condition and is of a specific value. If your vehicle does not meet these criteria, you may want to consider an unsecured car loan. However, bear in mind secured used car loans are available.
  • You want to borrow funds for two or more purposes. If you’re borrowing money to buy a car as well as consolidate debt, or to purchase your rego or even to get the vehicle modified, an unsecured car loan may work better for you. With a secured car loan, you can typically only borrow the value of the car, so the lender is sure it can recoup its cost if you default on the loan.
  • You don’t want to use your car as security for the loan. Using your vehicle as a guarantee for a loan can give you access to lower interest rates and also help you to receive approval. However, if you don’t want to risk losing your vehicle if you default on the loan, you may want to opt for an unsecured loan.

Unsecured vs secured car loans: The benefits and drawbacks

Benefits Drawbacks
Unsecured car loans
  • No restrictions on the type of car you purchase.
  • You can use the funds for other purposes.
  • Interest rates are higher than with secured car loans.
  • More stringent eligibility criteria for the loan as it is more of a risk for the lender.
  • You don’t get access to features available with most car loans, such as pre-approval.
Secured car loans
  • Lower rates than unsecured car loans.
  • You may have a better chance of receiving approval as the loan is less risky for the lender.
  • Your car must meet the lender’s eligibility criteria.
  • You may not be able to borrow above the value of the car.

How does an unsecured car loan work?

An unsecured car loan is one which allows you to purchase a vehicle without needing to attach the car as security. Because the lender doesn’t use the car as security, there aren’t restrictions on what type of vehicle you can buy, such as it being under a certain age or of a specific value. You can also borrow more to take out insurance or cover additional vehicle costs.

An unsecured car loan is a higher risk for the lender because there is no guarantee attached, so you should expect a higher interest rate than you would with a secured car loan. You may also be subject to stricter eligibility criteria regarding your financial stability.

How to take out an unsecured loan to buy a car

The borrowing process may differ slightly between lenders, but typically you need to take the following steps when financing your vehicle with an unsecured loan:

  1. Find your vehicle. It’s good to get an idea of what kind of car you want to buy and how much it costs before you start looking for a loan. Even if you don’t settle on a specific vehicle, get a ballpark figure so you can start comparing your loan options.
  2. Work out what repayments you can afford. How much can you comfortably repay each month? Remember to take into account the on-road costs for your new vehicle.
  3. Compare unsecured car loans. Now it’s time to start your comparison. Look at how competitive the interest rate is and check for upfront and ongoing fees. The comparison rate gives you a good idea of the overall cost as it includes interest plus fees. Finally, check for features that are important to you such as repayment flexibility or the ability to repay the loan early. See our “how to compare” section below for more information.
  4. Check that you are eligible. Lenders have set minimum eligibility criteria that you need to meet to receive approval for a loan, which typically includes a minimum age requirement; minimum income; credit history conditions and employment requirements. The minimum eligibility criteria for loans are listed at the bottom of every review. If you are unsure if you meet any of the set criteria, contact the lender directly.
  5. Apply for the loan. Once you’re sure you meet the minimum requirements you can click “Go to Site” to apply online. Have your ID, financial and employment documents on hand to complete the application.
  6. Organise your funds with the lender. Lenders disperse funds in different ways. It may prefer to pay the car seller directly or send the funds to your bank account. Discuss the best way to receive the funds with your lender.

How can I compare unsecured car loans?

Here is what to look at when comparing your options:

  • Interest rate. The interest rate is the essential thing to take into account. Typically, the lower the rate, the lower the repayments are. The first thing you should do is to compare the interest rate different lenders offer by checking the “interest rate” column in our comparison table above.
  • Comparison rate. The comparison rate reflects the actual cost of the loan because it takes into account the fees as well as the interest rate.
  • Fees. Look for up-front costs such as application or establishment fees, plus ongoing charges such as monthly or annual fees. You may also find fees for additional payments or repaying the loan early which can make it restrictive, so check if these apply.
  • Repayment flexibility. Most lenders let you choose between weekly, fortnightly or monthly repayments. Check whether you can make additional repayments and repay the loan early without penalty.
  • Redraw facility. Redraw facilities allow you to withdraw any extra repayments you put into your car loan, which is particularly useful in emergencies when you may need the cash, but check if a fee or limit applies.

Summary: What to remember about unsecured car loans

  • Interest rates are higher than secured car loans.
  • There are no restrictions on the car you can purchase.
  • There may be more stringent eligibility criteria.

More guides on Finder

  • Investing – your options explored

    Your simple guide to the different types of investments, how they work, and how to choose the right investments for your needs.

  • Passive income ideas for New Zealand investors

    Looking for an easy way to earn money while you sleep? Investing in shares, peer-to-peer lending and renting out property can all offer the returns you desire.

  • Kiwi Car Loans review

    Borrow up to $500,000 for your new vehicle, caravan, boat or motorcycle with a secured or unsecured finance from Kiwi Car Loans.

  • Car finance for work visa holders

    When you’re a temporary resident in New Zealand, you want to see everything, which can be difficult without a car. Luckily there are some lenders that consider car loans for people on a work or study visa. Find out how to apply here.

  • 10 ways to teach kids about money

    Encourage healthy financial habits for the future with these tips on teaching kids about money.

  • 20 top money tips for students

    Be smart with your money while you get your qualification with these top student money tips.

  • Mortgage calculator

    In five steps our free and independent home loan repayment calculator tallies your minimum monthly, fortnightly or weekly mortgage repayments.

  • How to invest for your kids

    Looking at investments for your child? Learn about some of the different options available when investing for kids.

  • Payday loans in Auckland

    We look at payday loans available in Auckland, including which lenders are based here, alternatives to payday lenders.

  • Motor Vehicle Finance car loan

    Get the best rate for your circumstances with a car loan from Motor Vehicle Finance. Answers within two hours.

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site