Pre-approved car loan comparison

Want to know precisely how much bargaining power you have when searching for a new car? A pre-approved car loan can put you in the driver’s seat.

If you’re looking for finance to help you buy a car, the typical vehicle-buying process involves you finding a car, then applying for a loan to help you purchase it. Pre-approval is available from some car financiers, so you can head to a dealership knowing how much money you have to buy a vehicle. Discover everything you need to know about pre-approval and compare some of your options on the page below.

Compare some of the options available to apply for

When you are searching for a car loan, it is essential to compare your options. While not all the loans below offer pre-approval, it is imperative that you know what is available before you start comparing.

The ins and outs of pre-approval car finance

When you apply for pre-approval, the lender evaluates your financial position to determine how much you can afford to borrow. During this process, you need to provide the same details as you would for a standard loan. It’s important that you understand pre-approval is only valid for a short period.

A significant benefit to a pre-approved car loan is that it gives you an advantage when it comes to negotiating the price of a vehicle. You know how much you have to spend and you can make an offer immediately. However, it also means you know your budget limitations, so if the salesperson can’t match your negotiations you have to walk away. In a way, you have also committed to the loan, as the lender lists it on your credit file. So, if salesperson if offering competitive dealer finance you may not be able to take advantage of it.

While pre-approved car loans are not as widely available as other standard car loans, there are still a small number of lenders you can consider.

What is conditional approval?

A lender gives you conditional approval when it initially accepts you for a car loan. Based on the details you provide during the pre-approval process, the lender agrees you can borrow up to a specific amount. Unconditional approval is where the lender accepts you for a loan to buy a particular vehicle. Lenders may have restrictions on the types of cars they finance, so it needs to be sure the vehicle falls within these restrictions before it gives the final green light.

How to receive pre-approved for a car loan

  1. Get a copy of your credit score.
  2. Ensure you have all your documents and pay slips.
  3. Compare a range of loans.
  4. Contact the bank or financial provider with whom you wish to apply.
  5. Shop around for your next car.

What types of car sales can I use with a pre-approved car loan?

You can use a pre-approved car loan to purchase a car through a dealership, a private sale and at an auction. These are also the situations you can use a regular car loan. So in that regard, a pre-approved car loan serves the same purpose as a standard car loan.

Have you weighed up the benefits and drawbacks of pre-approval?

  • Buyer confidence. Pre-approved car loans reassure buyers that they have a good chance of receiving finance for their chosen car.
  • Understand your financial situation. The lender has already assessed your financial position and confirmed you can afford the loan and therefore the car purchase before you go out to buy it.
  • Bargaining power. Pre-approval can give you the upper hand when negotiating a price at the car dealership.
  • A shorter period. Conditional approval for some loans only remains available for a short period.
  • Limited choice. There is a smaller number of lenders that offer pre-approval when you compare it to those who provide standard car loans, so you have a limited selection.

Features of car loans

Pre-approved car loan features

You may get some of the best features and interest rates on the market with a pre-approved car loan:

  • Secured against your vehicle. Interest rates are lower on loans that are secured using your car as guarantee, which saves you money and keeps your repayments manageable.
  • Choice of fixed or variable interest rates. Keep your repayments the same each month or take advantage of the flexibility of a variable rate loan.
  • Up to seven-year loan terms. Longer loan terms can help make the regular payments more affordable. Fixed rate loans may come with a maximum loan term of up to five years.
  • Flexible repayment options. Payment choices may differ among lenders, but you can typically choose between weekly, fortnightly or monthly repayments.
  • Extra repayments & redraw. Does your car loan allow borrowers to make fee-free additional payments and redraws to suit your ever-changing financial needs?

Things to consider before applying for pre-approval

There are a few things you should do before buying a car, and these vary from person to person. Here are a few things to bear in mind.

  • Research your car. The make. The model. The year. The colour. You also need to take into consideration the vehicle’s fuel consumption.
  • Check your financial standing. Car loans are a considerable financial commitment. Ensure you have the necessary funds or pre-approval.
  • Test-drive the car. If you take the car for a test-drive, it lets you find out if there are any issues.
  • Shop around. It is a good idea to not to buy the first car you see. You may find suitable cars at several dealers, so check out a few before you make a final decision.

How do I apply for a pre-approved car loan?

Apply online to see if you qualify for a pre-approved car loan. You can compare your options using the table on this page and click ‘apply’ once you find the right loan for you. Keep information handy, ie your income details; employment information; other income, assets and liabilities, plus your photographic ID. Applying has never been easier, with some lenders granting pre-approval within 60 seconds.

About your next car loan

Have more questions about pre-approval?

You asked, and we listened. Here are the top questions you have about receiving pre-approval for your next car loan.

Should I get a new or used car?

As with any large purchase, it’s essential to compare your options. You should choose a car based on the features you want, and then pick one within your budget. There are benefits and drawbacks to new and used car purchases. For example, used cars can be a bargain but may come with unknown mechanical problems, while new vehicles come with a factory warranty but depreciate quickly.

Should I be worried about any extra costs?

  • Third Party Insurance. Car insurance is not compulsory in New Zealand but having third party insurance is a great idea, as it covers anyone who may get hurt as a result of your driving.
  • Insurance. Again, not mandatory in New Zealand, but the extra protection could look after your car.
  • Ongoing costs. You have to pay for the continual upkeep of your next car including servicing, vehicle licensing (rego), warrant of fitness etc.

Who can get pre-approval?

Depending on who you bank with you may already have pre-approval. Compare the lenders above to find out. You have to be over 18; a permanent New Zealand resident or citizen; have a job with a regular income and be able to afford the loan repayments.
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