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

Used car finance and loans

You can still get a car loan if your vehicle is secondhand. Make the right choice with our guide.

Looking at how you can finance the purchase of a used car? You might want to consider getting a used car loan. This guide will help you understand everything you need to know about buying a second-hand car with used car finance.

Low rate used car loans available on Finder

Name Product Interest Rate (p.a.) Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee
FAST QUOTE
Simplify Secured Car Loan
6.25% - 12.50%
$5,000
$500,000
12 - 60 months
$100 - $500
Eligibility: Must be 18+, a New Zealand resident or permanent citizen and have an income of at least $500 per month.
See how much you could borrow without affecting your credit score.
MTF Finance Secured Car Loan
8.20% - 20.20%
$2,000
$100,000
3 to 60 months
$376
Eligibility: Must be 18+, be an NZ citizen, resident or have a work visa, and have a regular source of income.
Secured car loans from $2,000.
FROM 6.99%
The Co-operative Bank Unsecured Personal Loan
6.99% - 19.99%
$3,000
$50,000
6 months to 5 years
$200
Eligibility: Be 18+, an NZ citizen/permanent resident, or have a valid work visa.
Floating-rate, unsecured personal loans from $3,000.
Kiwi Car Loans Secured Loan
6.95% - 19.95%
$5,000
$500,000
1 to 7 years
$195 - $995 depending on lender
Eligibility: Be 18+, an NZ citizen, permanent resident or have a work visa, and have an income of least $500 per week.
100% online secured car loans from $5,000
Lending Crowd Secured Car Loan
5.03% - 15.44%
$5,050
$200,000
3 or 5 years
$450 - $1,450 depending on the amount borrowed
Eligibility: Be a NZ resident/citizen and have a good credit score.
Borrow $5,050 to $200,000 for your chosen vehicle. 100% online with no paperwork or early repayment fees.
CarFinance2U Car Loan
8.95% - 23.95%
$5,000
N/A
1 - 5 years
N/A
Eligibility: Be at least 21 years old, have a valid NZ driver's licence and be an 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.
loading

Compare up to 4 providers

How does a used car loan work?

A used car loan works the same way as a new car loan. It uses the vehicle you’re purchasing as security, and in return, you receive a competitive interest rate.

You can either apply for your loan first and get pre-approval, so you know how much money you have to spend on a vehicle, or you can find the car you want to purchase and then apply for a loan.

Either way, the lender needs all the vehicle’s details before it can entirely approve you.

Lenders have restrictions on the type of car you can finance, for example, you may not be able to fund a vehicle which is over twelve years old at the end of the loan term.

Repayment flexibility differs between lenders, but you can typically select weekly, fortnightly or monthly repayments. You may be able to repay your car loan early without penalty or make additional payments without additional fees.

If you receive approval for a loan, the lender may prefer to pay the car seller directly or may send the funds to you to pay the seller. Discuss this with your lender before you apply.

See our tips for buying a used car.

3 used car finance options and their differences

What type of finance is available for purchasing a used car?

  • Secured loan. Certain vehicles, under a few years old, may qualify for this type of loan, which usually offers the most competitive interest rates.
  • Unsecured car loan. These loans have higher interest rates, but fewer restrictions attached to them.
  • Dealership finance. Car dealers will likely offer some attractive rates with their chosen finance partner. However, often these agreements are subject to hefty deposits and balloon payments, which require you to make a final payment of several thousand dollars at the end of the loan term. This way, the repayments are smaller and seem cheaper.

How to find the perfect used car loan

Here’s what you need to consider when shopping for a used car loan:

  • Interest rate. Generally speaking, you want as low an interest rate as possible. The lower this number, the more you’ll save. The difference can be quite stark. Suppose you want to borrow $10,000 over 3 years to purchase a second-hand car. If you took out a loan with an interest rate of 4.5%, the loan would cost you $709 in interest. If the rate was 7%, you’d pay $1,116 in interest, a difference of $407. Due to the potential risk of a used car failing prematurely, interest rates will likely be higher for a second-hand car.
  • Payment flexibility. It’s always nice if a loan fits in with your budget. If you get paid weekly, you’ll no doubt prefer a used car loan lender that offers weekly repayment schedules. If you’re paid monthly, you’re probably more used to making larger payments, 12 times a year.
  • Loan term. The longer you borrow the money over, the more potential risk and the more you’ll spend in interest. On the flip side, the repayments will be smaller, as the cost is spread across a longer period. For example, a used car loan with an interest rate of 4.5% over 3 years costs $709 in interest, with monthly repayments of $297. Over 5 years, the monthly payments are just $186, but the amount paid in interest jumps to $1,186, or a $477 difference. Deciding on how long to take out your used car loan comes down to balancing affordability and expenses.
  • Charges and fees. Many loans require application fees, which can vary from $200 to $800. Other loans may charge a service fee, which could be as much as $10 per month. As a result, you need to factor in these costs. A loan with a $10 monthly service fee, over 3 years will cost you $360. However, if the loan has a low application charge, it could still work out as the most cost-effective solution for you.
  • Vehicle criteria. This seems obvious, but you’ll want to pick a lender that’s prepared to offer you a used car loan for the age and model of vehicle you’re looking at.
  • Pre-approval. This is a big one if you’re buying a used car. Conditional pre-approval means you know how big a loan you can get. This puts you in a great place when haggling.
  • Early payment fees. It’s nice to have options like the ability to pay back your used car loan early, without termination fee penalties (for example, if you traded your old car in for another and want to clear the outstanding balance, or you come into some money).

Pros and cons of buying a used car

ProsCons
If you (or someone you’re acquainted with) knows a bit about cars, you can save yourself tens of thousands of dollars purchasing a used vehicleWithout doing your research, you could buy a lemon with premature failures, defects or dodgy repairs
Less likely to encounter a salesperson using high-pressure selling strategiesTakes time browsing the Internet and picking up the phone to find a car you want to test drive
No waiting for a car to be built at the factory, you can purchase a car there and thenPrevious owner might have neglected to maintain the car or driven it hard
You could get a hybrid or electric car for a significant discountCar could be out of factory warranty
Buying private cuts out dealer, meaning you’re not paying a margin to cover their overheadsLimited by what’s currently on used car market
Used high-end models could be within your budgetTighter financing conditions
Sellers expect to haggle and negotiate which results in a lower priceCertain vehicles might need a roadworthiness certificate or safety inspection
Lower value can mean lower car insurance costs

Used car buying money-saving tips

As well as shopping around for a great used car loan deal, you can save yourself even more money with these tips.

Consider less popular brands and models

The bestselling new cars will almost certainly become popular used car models. As a result, sellers can set their prices accordingly. Rather than getting fixated on one brand or model and trim, be open to rival models. You’ll benefit in several ways.

First, car manufacturers that are trying to compete with a sought-after and established marque might introduce longer warranties, better standard specifications and even drop prices. You could swoop in and take advantage of this by purchasing the rival brand on the used car market.

To save money, buy privately

Used car dealers are a middle party. Yes, they might offer attractive things like short-term warranties, but in reality, they can add a couple of grand onto a car’s sticker price to cover their costs.

If you have a car enthusiast friend or family member, take them along to a private sale and you could end up with a much cheaper used car. If you don’t know a car expert, consider paying for a pre-purchase inspection, which can help you avoid buying a lemon.

Haggle

Some people hate haggling, it makes them cringe. Most second-hand car dealers and private sellers will expect you to at least try. Some may even mark their car up a little, with the expectation that buyers will try to knock them down. Remember, this is a business transaction, so stay friendly and emotionally detached from the car.

Haggling doesn’t have to become a verbal slanging match. You can be polite and negotiate—sometimes even being a bit cheeky might get you some money slashed off the deal. If you smile while you’re doing it, that goes a long way. A common technique for bartering is to simply point out things you’re not happy with, for example the tyres are heavily worn and need replacing, the windscreen is scratched or there are stone chips in the paint.

If you are sincere and genuine, a lot of sellers will relent and meet you halfway. Spend some time researching the car model; find out if it needs any major scheduled work soon like timing chain/belt replacements or complete fluid renewals.

Which used car should I buy?

There are hundreds of different models on the used car market, so you might find things overwhelming.

The first and most important decision is, what kind of vehicle are you looking for? Each have their own merits and downsides.

Car body typeProsCons
Light car body type
Light car
  • Great for new and young drivers
  • Easy to handle and park
  • Ideal for cities and towns
  • Extremely economical
  • Limited rear passenger space
  • Small boots
  • Small engines have to work hard on motorways
Small car body type
Small car
  • Great for new and young drivers
  • Still easy to park and drive
  • Decent in towns and metro areas
  • Very economical
  • Hot hatch versions available
  • Hybrids and electrics available
  • Practical boot size for everyday living
  • Sedan or hatch variants on offer
  • Some luxury models on offer
  • Some models have cramped second row of seats
  • Boot might not be big enough for family trips
Picture not described
Medium car
  • Offers a great all-round practicality
  • Decent size for families of four
  • Luxury models on offer
  • Electric and hybrid models available
  • Should be comfortable for four adults, five at a push
  • Wagon models have impressive boots
  • Less economical than smaller vehicles
  • Not great for large families
Large car body type
Large car
  • Plenty of room for up to five adults
  • Many luxury models available
  • Practical size for carrying, especially as a wagon
  • Optimum comfort for long-distance driving
  • Less economical
  • Market dominated by higher-end models
  • Cumbersome around town
Sports car body type
Sports car
  • Fun weekend toy, with the option for daily driving for a couple
  • Soft-tops available
  • Fast and exciting
  • Prestigious brands
  • Thrilling looks
  • Boots vary widely but aren’t typically generous
  • Seating for four is usually a big ask
  • Can be low to ground, not great over speed humps
  • Firm suspension can be jarring
Small SUV body type
Small SUV
  • Extremely popular, with plenty of choices
  • Some hybrid models and a few electrics
  • Practical all-rounders
  • Higher up seating position
  • Proportions can mean more interior room
  • Economy has improved over the years
  • Easier to get in than lower cars
  • Still usable around the city
  • Not as much room as larger models
  • Fuel economy might not be as good as a smaller car
  • Handling might not be as sorted as cars
Medium SUV body type
Medium SUV
  • Great all-rounder
  • Electric and hybrids available
  • Reasonable for towing
  • Seven seater models available
  • Good for families
  • Prestige models available
  • Third row seats could be short on space
  • Less economical
  • Larger body might be more clunky in town
Picture not described
Large SUV
  • Electric models and hybrids available
  • Good for towing trailers
  • Some off-road capable models
  • Larger interiors
  • Seating for up to eight
  • Luxury models available
  • Lots of passenger comforts
  • Some rugged, ute-based models
  • Large boots
  • Less economical
  • Cumbersome size for multi-storey and tight car parks
People mover body type
People mover
  • Seats for up to nine
  • Sliding doors on some models make entry and exiting easier
  • Higher up seating position
  • Doubles up as a van
  • Highly practical
  • Large, van-like proportions not great for street parking
  • Smaller used market
Ute body
Utility
  • Large payloads
  • Great for business
  • Hard-wearing
  • Off-road capability
  • High towing capacity
  • Seats up to five
  • Premium interior models available
  • High seating position
  • Practical
  • Beefy engine and boxy shape not great for fuel economy
  • Cargo space needs securing
  • Restricted interior storage
  • Higher maintenance requirements
Van body
Van
  • Large, covered cargo space
  • Decent payloads
  • Solid towing capacity
  • Ideal for tradies
  • Crew cabs available with five seats
  • Can be converted into a temporary or permanent camper
  • Lots of bodywork for advertising
  • Panel van has limited visibility
  • Economy not amazing, but not as bad as a full-size truck
  • Often have workhorse spec interiors

Common questions we’re asked about financing a used car

More guides on Finder

  • Lazy Tax Report 2021

    Finder’s Lazy Tax Report found 9 out of 10 Kiwis are missing out on a better deal by sticking with the same provider.

  • Charge ’em up: 45% of Kiwis would consider an electric car

    New Zealand’s interest in electric cars is accelerating, with Finder research revealing nearly half of the population would consider an electric vehicle as their next car.

  • What is Compound Finance?

    We explore how to use Compound Finance for lending and borrowing.

  • Artificial intelligence stocks

    You might think that AI is just something you’ve seen in sci-fi movies, but it’s slowly working its way into our day to day lives. Find out how you can invest in it.

  • Uber Eats delivery driving – a guide

    We breakdown the benefits of Uber Eats delivery driving, including how much you can earn and what you need to do it.

  • Credit cards vs buy now pay later

    Both buy now pay later plans and credit cards give you ways to pay off purchases over time – here’s how they compare.

  • Finance Bloom business loan review

    Broker Finance Bloom can help you get a secured or unsecured loan to help your business bloom.

  • First Credit Union review

    Review the loan options at First Credit Union, a non-bank lender offering personal loans, debt consolidation, car and home loans.

  • What is a novated lease?

    If you want to reduce your taxable income but get something for it, such as your next car, you can consider salary sacrificing it with a novated lease. Find out exactly how it works and if its right for you.

  • Uber car rentals

    Renting a vehicle to drive with Uber gives you an easy way to get an eligible vehicle as well as have your insurance covered. Find out how it works and how to sign up today.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com 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
Finder.com 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 finder.com 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