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Secured car loans

Use your car as security and benefit from lower interest rates.

Simplify Secured Car Loan

Simplify Secured Car Loan logo

From 6.5% p.a.

rate

  • Borrow up to $500,000
  • Min. loan amount: $5,000
  • Loan term: 1 to 5 years
  • Establishment fee: $100-$500
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Whether you’re purchasing a new or used vehicle, you may be able to use the vehicle as a guarantee to take advantage of a lower interest rate. Find out what you need to know about secured car loans in this guide.

Secured car loan comparison 2022

Name Product Interest Rate (p.a.) Loan Amount Loan Term Establishment Fee Requirements Table description
FAST QUOTE
Simplify Secured Car Loan
7.90% - 12.95%
$5,000 - $500,000
12 - 60 months
$100 - $500
Requirements: NZ citizen/permanent resident, income of at least $500/month.
See how much you could borrow without affecting your credit score.
MTF Finance Secured Car Loan
10.50% - 22.50%
$2,000 - $100,000
3 to 60 months
$376
Requirements: NZ citizen/permanent resident or have a work visa, have a regular source of income.
Secured car loans from $2,000.
Lending Crowd Secured Car Loan
6.45% - 17.23%
$5,050 - $200,000
3 or 5 years
$350 - $650
Requirements: NZ citizen/permanent resident, have a good credit score.
100% online with no paperwork or early repayment fees.
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Compare up to 4 providers

What is a secured car loan?

A secured car loan is a loan where the funds provided are used to purchase a vehicle, then used as security against the loan. Of course, the car you buy needs to be in good condition, so lenders usually require the car to be new, but you can find secured car loans for used vehicles.

You can also use some secured car loans to refinance an existing secured loan from another bank.

How do secured car loans in New Zealand work?

Secured loans can offer you a lower rate of interest because the lender has less of a risk. However, if you default on the loan, the car you purchase is repossessed by the lender.

How does a secured car loan differ from an unsecured loan?

There are several standard differences between these two types of loans:

    • Loan amount flexibility. A secured loan restricts how you can use your funds. For example, you may not be able to borrow more to cover the rego, insurance, or other costs because the loan amount relates to the vehicle’s value. Unsecured car loans have no such restrictions, and you can use the loan amount however you choose.
    • Vehicle requirements. Lenders offering secured car loans have guidelines for what type of vehicle you can purchase. For example, the car may need to be below a specific age, or you cannot buy particular vehicle types. However, if you opt for an unsecured loan, you can purchase whatever kind of car you like.
    • Interest rates. Interest rates for secured car loans are typically more competitive than unsecured loans.
    • What happens if you default? When you default on a secured car loan, the lender can sell the vehicle to recoup its losses. If you default on an unsecured loan, the lender has no right to your car. Always talk to your lender in the first instance. If you can’t make a payment, they should be willing to come to an arrangement.

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    How to compare different Kiwi secured car loans

    There is a range of secured car loans available from various lenders. Finding the best-secured car loan depends on different factors, for example, your financial situation and the length of the loan you require. But there are some other factors that you can use to determine the merit of the loan:

    • Interest rate and comparison rate

    The interest rate of a loan determines what your repayments are and differs significantly between lenders. Comparison rates incorporate the total cost of the loan, so ensure you compare this before you apply with a loan provider.

    • Fees

    Once you accept your loan, these can include establishment fees and ongoing costs, such as loan service charges. Compare fees—as well as the interest rate and loan features—to make sure you get a good deal.

    • Loan term

    Lenders set specific loan terms—usually between one and seven years—that you can select. Make sure the lender lets you repay the loan within a period that suits your budget.

    • Minimum and maximum loan amount

    A typical minimum loan amount is $3,000, while the maximum amount varies between lenders. Some lenders don’t have a maximum borrowing amount and consider it on a case-by-case basis. Bear this in mind depending on what car you wish to buy.

    • Additional repayments

    Some lenders let you make extra repayments to pay off the loan sooner. If you think you can put more money towards the loan, then ensure you include this feature in your comparison. However, bear in mind that some lenders charge fees if you pay off the loan earlier than expected. So, if you want to do this, look for a loan that won’t penalise you.

    • Other features

    Loans come with various features to help you manage them better. For example, some lenders offer discounted insurance products with its loan, and others provide vehicle finding services.

    The benefits and drawbacks to consider

    • Competitive interest rate. Secured loans come with lower interest rates than unsecured loans, which helps to keep your repayments manageable.
    • The vehicle doesn’t have to be brand new. Some lenders let you use a used vehicle to guarantee a loan, and cars up to 12 years of age or older can be eligible. The age of eligible vehicles may vary with lenders, e.g. it is up to 20 years of age with Kiwibank.
      • A restricted loan amount. As the loan is secured, you can typically only use the loan amount to purchase the vehicle (and not for unrelated costs). However, you may find some lenders willing to extend this loan amount to buy car insurance or something similar.
      • Risking your vehicle. Although using your car as security lowers your repayments, it also means that you lose your vehicle if you default on your loan. So make sure you only take on a loan you can afford and keep on top of the repayments.

        Is there anything to avoid with secured car loans?

        • Over-estimating your repayments.

        Although using your new car as security has its benefits, it also means the lender can take it away if you default on your loan. So be sure only to take out a loan that is manageable with repayments you can meet.

        • Not being aware of fees.

        If you do not familiarise yourself with the fees associated with a secured car loan from a particular lender, you may end up paying more than you thought. Some lenders have lower fixed interest rates but higher monthly fees, which means you end up paying more anyway. Make sure you’re aware of all aspects of the loan by reading the terms and conditions.

        • Not choosing a loan that meets your needs.

        It’s common for people to choose a loan that they regret in a few years. However, you could be paying off this loan for a while, so make sure you consider possible changes in your financial circumstances. For example, you may receive a promotion and want to increase your repayments to pay off your loan sooner, but your lender may not allow this. Make sure you check all the limits of the loan and its flexibility. If the loan doesn’t meet your needs, you may want to refinance with another lender.

        Frequently asked questions about secured car loans

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