Car Finance

Cash is king, so purchasing your new wheels is often easiest if you have the purchase price sitting ready in a bank account. If you’re planning to finance your new car, consider applying for a pre-approved personal car loan - this means you’ll have finance out of the way before you start shopping. This is particularly useful if you’re buying second-hand from a dealer - saying that you’re paying cash means one less thing to haggle over. You can also use cash as a bargaining chip on price - unlike a loan, it’s easy to claim that the sum in your bank account is a clear maximum that you’re able to pay.

If you need to finance a car but your credit history is poor, you’ll need to think through your options carefully. A decade ago, financiers offered so-called ‘NINJA’ car loans (no income, no job or assets), often on unfair terms to borrowers who couldn’t afford the purchase. That practice is less common now, but bad credit deals are still out there. If your credit score means that you’re not a good fit for a conventional lender, there are a few options available.

Be Honest About The Car You Need 

Hunting for a new car is exciting, and car salespeople know how to leverage this excitement to their advantage. By keeping your budget and requirements in mind throughout your search, you should avoid buying more car than you need. Unless you’re in the market for a luxury vehicle, a smart rule of thumb is to buy a car suited for whatever you’ll use it for the most. If you’re heading to the snow every weekend in winter, paying extra for a vehicle with AWD is a smart - and safe - call. On the other hand, if your idea of a good weekend is brunch and a walk, consider whether you could get by without a full-size SUV. Splitting the cost of renting a larger vehicle for an occasional weekend getaway with family or friends is often cheaper than the cost to finance (and fuel) a large vehicle 365 days of the year.

Where do I start to look?

Buying a car privately or at auction can shave hundreds or thousands off the cost of a vehicle. That said, there’s a reason that some buyers are happy to pay a little more to go to a dealer - if you buy a car from a dealer, you’ll enjoy some protection under the Consumer Guarantees Act. If you decide to buy privately, think carefully about the seller and the platform you use – platforms where sellers have to pay to advertise a vehicle (such as TradeMe or Autotrader) might have better quality vehicles than a Facebook buy and sell group. Buying a car from family or friends can be a good option if you’re confident the vehicle has a solid service history.

If you’re determined to cut out the middleman, you could import your own car from Japan. This is often a great way to get a premium vehicle for less money although the risk is on you that the vehicle won’t meet the standards to be registered on New Zealand roads.

Used or New?

If money was no concern, we’d all buy new cars - aside from that enticing new car smell, driving a new car means enjoying the latest in automotive technology and (in theory) years of hassle-free motoring. In reality, these advantages are probably overstated – a 2018 Corolla won’t have that much of an edge on a 2014 model and, if it’s well maintained, should be a reliable daily ride.

Ultimately, deciding whether to buy new means carefully considering whether you’re willing to shell out a sizeable premium for the privilege; the Dog and Lemon guide estimates you can typically get a one year old car for around 60% of the cost of new. If you can afford new and place a high value on guaranteed reliability and the latest technology, buying new may be a sound option. Otherwise, don’t stress - a good used car should give you several years of reliable motoring at a much more reasonable price.

Although a new car should cost more than a used model, buying new doesn’t mean you have to settle for the sticker price. Sticker prices for most car models are public knowledge, which makes them an easy starting point for negotiating with a dealer. Dealers pay a lower invoice price to manufacturers, but they aim to get you as close to the sticker price as possible.

To pay as close as possible to the sticker price, make sure to shop around. Salespeople and their managers have some discretion to accept a low offer, and by negotiating at many dealerships you improve your chances of securing a good deal. Be polite but firm – if a dealer is unwilling to move on price, move on to the next dealer. Leave your contact details and ask the dealer to contact you if they can meet your price expectations. Try to be friendly, but don’t feel bad about negotiating with multiple dealers - you don’t owe one particular salesperson anything.

A common tip is to shop for a used car at the end of a month or even at the end of a year, as some dealers work to monthly and annual sales targets. The aim is to come across a salesperson who hasn’t quite made target and might be willing to offer a good price as a quick way to make budget. There is probably an element of truth to this, but the likely savings may be overstated.

Get the Full Story

Whether you’re buying a used car from a dealer or privately through a website like TradeMe, it’s crucial to take your time. There’s a lot to take in - a car’s service history, its physical condition and the way it drives – and it’s in a seller’s interest to show you what’s good and skim over what’s not. If a car is a recent Japanese import, ask for the ‘Japanese Auction Sheet’ - this should record if a car has been damaged or has hidden rust. The auction sheet isn’t a substitute for a good physical inspection, but it can help you identify hard-to-spot issues.  If you’re buying a car privately, make sure you’re aware of any big maintenance items coming up, such as bald tyres or a worn out cambelt.

What will my car loan repayments be?

The size of your repayments depends on how much money you want to borrow and the length of time you choose to pay your loan back. Harmoney’s default payment schedule is monthly, but you can make payments as often as you want, and pay as much as you want, as long as the monthly minimum is met.

Once you submit your loan application, our team will assess your request. If we approve your loan application, we’ll give you a credit grade that tells you the maximum loan amount you’re approved for and the interest rate that will apply. You’ll also see what your repayments will be for a 36 or 60 month loan term.

How is my interest rate calculated for my vehicle purchase?

Different lenders set different interest rates. If Harmoney approves your loan application, we’ll assign you a credit grade that tells you what your interest rate will be, as well as the maximum loan amount you can borrow.

If you’re a low-risk borrower, we may assign you the lowest risk grade (A1), which has an interest rate of 6.99% p.a. The highest risk grade (F5) has an interest rate of 24.69% p.a.

Find out more about our interest rates >

How is the cost of my car loan calculated?

The cost of your car finance is calculated by the loaned sum + interest + any fees that are incurred through loan administration. Our vehicle loan repayment calculator gives you quick estimate on what you’ll have to pay.

Calculating loan repayments

Once you submit your car loan application, your request will be assessed by our team. If Harmoney approves your auto loan application, it will be assigned a credit grade that shows the maximum loan amount you’re approved for, and the interest rate that will apply. You’ll also be shown what the repayment amounts will be for a 36 or 60 month loan term.

Early loan repayment period

You can repay your loan ahead of the repayment schedule without any penalties or fees. If you have questions about how to calculate paying the remainder of your loan then get in touch with the Harmoney team via

Once You’ve Got Your Car

Once you’ve got your car, there are a few more things to take care of:

  • Make sure that the car is transferred into your name and that the registration and WOF are up-to-date.
  • Arrange insurance as soon as possible - ideally before you drive the car off the lot. Getting a range of quotes is important but, for now, the most important thing is that you’re covered.
  • If your car is covered by a mechanical warranty, make sure you understand the terms.
  • If your car comes with a service plan, schedule your next service.
  • If it’s been a while since you’ve driven, consider shopping around for fuel loyalty and fuel card programs.

If you’ve made it this far, you’re well on your way to your new car - and your next big journey. If you need a little help to make it happen, we’re here - check out how much you could borrow and get an indicative rate for a car loan using our personal loan calculator. And, of course, a new car needs a good run in, so why not take your new wheels on a weekend road trip. Whether you’re heading north of Auckland or south of Christchurch, or somewhere in between, you want to make sure that your new ride is safe, but fun!