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Guide to student car finance

Ready to get behind the wheel of your own car? Find out how you can get a loan as a student.

Having a car can make student life a lot more convenient, but finding the money to buy one can be hard. If you’re not able to save enough or you can’t ask your mum and dad for help, a car loan can help get you the car you want.

Find out how to get a car loan and compare your options below.

How does a car loan work?

A car loan is a financing option that lets you purchase a new or used vehicle. Car loans are typically secured loans. This means the vehicle you’re purchasing is used as a guarantee for the loan. A secured loan will come with lower interest rates, but you will need to make sure the car you’re looking to buy meets the lender’s eligibility criteria. For instance, not all lenders will give you a loan if you’re buying a used car.

What if I’m an international or exchange student?

Unfortunately most lenders require you to be a New Zealand citizen or permanent resident. If you’re on a study visa or other type of visa, it’s unlikely that you would be eligible for a loan, but it may be worth checking with the lender directly.

What type of car finance is available to students?

There are two main car loan types that you can choose between.

  • Secured car loan. Usually, secured car loans tend to have lower interest rates because the car you’re buying is attached to the loan as a guarantee. Lenders will usually place restrictions on what kind of car you can buy. For instance, the car may need to be under a certain age or in a certain condition. Check that your car will be eligible before applying.
  • Unsecured personal loan. If you want to purchase an older car or also want to use the loan amount for something else, you can consider an unsecured car loan. You will need to meet additional eligibility criteria for unsecured personal loans because they are more of a risk for lenders to take on. If you default on the loan, the bank has no security to possess. The interest rates are generally higher as well.

What rates and fees do car lenders charge?

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
8.70% - 20.70%
$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
$200 - $500 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.
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Compare up to 4 providers

How to apply for student car finance

Finding a car loan to purchase your vehicle is pretty straightforward. Here’s how it works:

  • Compare your loan options. Once you know what kind of car you want to buy, and where to buy it (Trade Me, Autotrader or Turners are good places to try for used cars), you can start comparing your loan options. Consider the interest rate, fees and features of the loan to find one that’s right for you.
  • Check the eligibility criteria. Even if the loan sounds right, you may not meet the eligibility criteria. Lenders usually require you to be over 18, earning a regular income and to have some form of employment. Your car will also have to meet eligibility criteria.
  • Consider pre-approval. If you haven’t decided exactly what car you want to buy, you can consider applying for pre-approval so you know how much of a budget you have to work with, which can also work well if you’re buying a car at an auctionhouse, like Turners.
  • Get your documents ready. The next step is sending through your application. Gather all the necessary documents, which includes a form of ID, payslips and information regarding your employment and finances (income, expenses and debt). If you’ve chosen your car, you need to submit the make, model and year, the VIN/chassis number, registration number and purchase price.
  • Submit your application. Depending on the lender, you may receive an instant response. Other lenders may take a few days to review your application and fund your loan.
  • Make your car purchase with the loan funds. Buying the car can happen in a few ways. The lender may pay the dealer/private seller on your behalf; you may be given a bank cheque to pay the seller or you may be given the funds to pay the seller directly. Cars bought from dealerships involve the lender paying on your behalf. If you’re sending the funds to the seller directly, the lender may need you both to sign a form.

Top 5 tips for students looking for car finance

If you’re a student, you may be working part-time or casually, be on a lower income and you may have limited credit history. This can make it difficult to get a car loan. Use the guide below to find out how you can secure finance.

1. Build your credit history

You will need to have a good credit history to be considered for a car loan. Your credit history is determined by your financial management skills, so you need to pay your existing bills on time, including your phone and utility bills. Also, don’t open and close credit accounts frequently, as this will show up on your credit report.

2. Check that the lender accepts your income type

You can acquire a car loan as a part-time or full-time student, depending on your income. It’s important to check whether the lender accepts your form of income, whether it be from casual work, permanent part-time work or StudyLink student allowance payments.

3. Confirm all the eligibility criteria

In most cases, you’ll need to be 18 years or older and a permanent New Zealand resident. The car you’re purchasing will also need to meet certain criteria. For example, it may need to be under a certain age or it may need to be in a certain condition. You can look here to find lenders who will consider you if you’re buying a used car.

4. Save as much money as you can for the deposit

Provide the biggest deposit you can for your car loan. Financial experts recommend you work on your upfront payment. A larger down payment demonstrates your financial ability and responsibility. It will also help reduce your monthly repayments and interest rates.

Consider opening a high-interest savings account to earn interest on your savings. Some of these accounts also have incentives for you to save regularly by awarding you bonus interest.

5. Consider a guarantor or co-borrower

Your guarantor will need to agree to take on the legal and financial responsibility for the debt incurred with your car loan if you fail to make the repayments. This is why it’s important for your guarantor to trust you and vice versa. You should make every effort to make your repayments, so your guarantor is never held responsible for the debt. If you’re opting for a joint personal loan, both of you will be responsible for repaying the debt. To ensure you make your repayments, use the Finder repayment calculator for an indication of your costs.

How you can compare car finance

When comparing student car loans, there are various things you need to consider:

  • Interest rate. Check whether the rate is competitive.
  • Fees. Take a look at the upfront and ongoing fees to get an idea of how much the loan will cost you. Then, use a car loan repayment calculator to see how much your repayments will be.
  • Repayment flexibility. Are you able to choose how often you make repayments? Can you make additional repayments without penalty? Can you repay the loan early without penalty? These are things to look out for.
  • Features. Does the loan offer any additional features? Some of these may include pre-approval, online account management, a car-buying service to help you find your car, or discounts on other products and services.

Ready to choose the perfect car?

Since this is your first car purchase, you may want to stick to an economy car. It’s easier for a lender to give you a car loan for an economy car rather than a luxury model, not to mention the running costs.

Do

  • Shop around
  • Attempt to haggle or bargain with car yards
  • Ensure the vehicle you want meets the loan requirements

Don’t

  • Buy the first car you see
  • Apply for the first loan you find
  • Apply for many loans at once

Compare car finance options

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