Car Finance Fees and Charges NZ

Car Finance Fees and Charges new Zealand
Car Finance Fees and Charges new Zealand

When considering car finance, you need to be aware of all the fees and charges that make up your car finance agreement. The lowest interest rate is not always the best option if your car finance establishment fees are high or you have monthly account maintenance fees. These all add up and can make your total repayment amount a lot larger than expected. Always do your due diligence when looking at your car finance options.

Car finance lenders in New Zealand will all have slightly different fee setups and amounts. Here’s a list of the more common car finance fees you’ll come across.

All fees and charges will be recorded in your car finance agreement disclosure statement and by law must be shown to you before signing your agreement so always check the disclosure statement thoroughly.

If you’re in any doubt about fees or charges, don’t sign the agreement! Ask what they are and consult a family member, friend or finance professional to get more clarification should you not understand something.

Car finance interest rate

Your car finance interest rate is the amount you will pay on top of your loan amount.

Car finance interest rates will vary in New Zealand from 5.03% to 29.99%. The interest rate you receive will depend on your affordability (income minus expenses) and your credit history. If you have low income with high expenses your affordability will be low. Combine that with a bad credit rating and if approved, your car finance interest rate will be high so you will pay more interest over the term of the loan.

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Car finance establishment fee

A car finance establishment fee is a one-off payment charged to you when you take out a loan for your new vehicle.

The amount payable will vary from lender to lender in New Zealand and could be anywhere from $100 to $450.

It is important to include the car loan establishment fee in your total loan amount when you compare quotes from different lenders. A finance company with a lower interest rate but high car finance establishment fee may be more expensive than another finance company who has a higher interest rate but low establishment fee.

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Car finance late payment fees

For most car finance agreements there will be fees if you miss a payment or are late paying your weekly/monthly installment. Fees will vary between lenders but could be around $25.

If you are nearing your payment date and think you will have trouble paying you are best to act quickly and responsibly and notify your lender to let them know and discuss any options. They will appreciate your honesty and could offer some extra days so you can make your payment.

Remember, they have approved your loan and you have formed a partnership with them so you are best to be open and honest, just as you would expect them to be open and honest with you.

If you have become sick or are injured, lost your job etc you may be able to apply for financial hardship with the lender and arrange a suitable, updated payment plan for the short term.

If you miss a payment without contacting your lender the alarm bells might ring so you’re best to contact them and explain your situation. If your car finance is a secured loan your vehicle can be repossessed and you don’t want that to happen. A payment default and repossessed vehicle will damage your credit score as well.

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Car finance account maintenance fees

Some car finance lenders may charge monthly maintenance fees. A maintenance fee could only be $2 or $5,  but this will add up over the course of your loan period so make sure you know what the monthly charges are and what the total cost is.

Monthly maintenance fees cover the cost of keeping your loan active.

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Car finance repossession fees

If you get in the unfortunate situation of defaulting on your agreed payments and do not catch up on whats owing you could find your car will be repossessed. This will happen with a secured loan, where your vehicle is recorded as collateral in case you miss your payments. The lender will take your car back and sell it to recover the money owing to them.

Depending on the lender, you may have up to 3 missed payments before the repossession process is initiated. Lets hope it does not come to this however!

Repossession fees could include:

  • Letter – Pre-possession notice
  • Letter – Repossession warrant notice
  • Letter – Post repossession notice
  • Field agent instruction fee – Where an agent is instructed to visit you to deliver any documents

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Car finance cost recovery fees

Cost recovery fees are any additional 3rd party fees that are included when establishing the loan. So any credit checks, identity checks, vehicle checks, PPSR etc.

These costs are generally kept to a minimum and the lender should only charge the actual costs when setting up your finance agreement.

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New Zealand Car Finance Providers

Get car finance quotes from multiple lenders and compare your interest rates. Your quotes from these lenders won’t affect your credit score so shop around and find the best rate for your financial situation

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