Car finance online in NZ: how to apply without paying for it twice

The short answer

Applying online is just a different front door. The questions are the same as in a branch or a yard: who are you, what do you earn, what do you owe, and what car is it for? What changes is how many lenders see your application and how many marks it leaves on your credit file.

The most useful thing you can do before you click anything is decide which route you are using. The next section sets them out.

Four ways to apply online

1. Direct to one lender. A bank, credit union or finance company with its own form. You deal with one organisation, and it checks your credit file. You get one answer, so if it says no, you start again somewhere else. Sorted suggests comparing as many lenders as possible, including credit unions.
2. Through a referral service. One form is passed on to several lenders. Fair Finance works this way: one application and one soft credit check go to a panel of approved lenders. We are paid by a lender only if a loan settles, and it never changes your rate.
3. Through a dealer. Many dealers have an online finance form. Sorted notes that dealers often offer loans provided by a separate finance company and may sign you up during the purchase, so compare it with other options. A dealer may be paid for arranging finance, so ask whether it is.
4. Through a broker. A broker takes your details and approaches lenders for you. A broker may be paid by the lender, by you or both, so ask. Consumer Protection says a broker fee should not be added to your loan if you are not using a broker. Ask what you will pay, if anything, before you sign. Fair Finance is not a broker, and our guide to dealer finance, brokers and banks sets out the differences.

None of these is always best. What matters is that you can compare at least two.

What happens after you press submit

Most online applications follow the same steps.

1. The form. Name, contact details, income, employer, rent or board and the loan amount.
2. ID and address. A photo ID such as a New Zealand driver licence, or a passport if you are not a resident. Lenders differ on what they accept.
3. A credit check. With your consent, a lender looks at your file at a credit bureau: Centrix, Equifax or Experian (formerly illion).
4. Income and costs. Lenders must make reasonable inquiries, so expect to upload bank statements or payslips.
5. A decision, or a request for more. It can take a few minutes or a few days, depending on the lender and how complete your paperwork is. Missing pages are the most common cause of delay.
6. An offer and a disclosure statement. This shows the rate, fees and total to repay. Sorted says it must be given before you sign or within five working days.
7. Settlement. The loan is paid to the seller, and you set up repayments and insurance.

Our guide to what you need to apply lists the documents in more detail, and the page on car finance pre-approval covers applying before you pick a car.

Soft checks and hard checks

A credit check is any look at your file. The two types matter because of how they appear to the next lender.

• A soft credit check is used to see where you stand. Fair Finance’s check is of this type, and it does not affect your score.
• A hard credit check comes with a full application for credit. It is recorded on your file as an enquiry.

Consumer Protection says lenders usually need your consent first, and you can ask a lender for the main reason for a declined application. Read the form before you submit, because it should say what check is run. Our guide to whether applying for car finance hurts your credit goes through the detail.

Check the lender before you hand over documents

An online form feels the same whether the business is solid or not, so do a few checks first.

• Search the Financial Service Providers Register. Consumer Protection says to check the lender is listed. An unregistered lender cannot legally give credit.
• Find the complaints process. Every lender must have one, and you can find it by asking, in the contract, or on the register. A lender should also belong to a dispute resolution scheme.
• Look for a full address and a phone number that works.
• Never pay a fee before you have an offer. Establishment fees belong in the loan paperwork, not in a payment request by text.
• Watch for pressure. A genuine offer will still be there tomorrow.

Reading the offer

When an offer arrives, ignore the weekly figure at first. Look for:

• The total amount repayable. Sorted says to ask for the full cost of the loan as one dollar figure over the whole term.
• The rate and the fees. Establishment fees, early repayment charges and default fees all matter.
• Add-ons. Optional insurance and warranties raise the amount borrowed, and you pay interest on them.
• A balloon payment. A low weekly figure that ends in a big final payment can leave a large sum owing.
• The security. For a car loan, the car is the security. Do a PPSR check before you pay for it.

A worked example (illustrative numbers only)

Say you want a $15,000 car over four years and two online offers arrive.

	Offer 1	Offer 2
Rate (illustrative)	12%	17%
Establishment fee	$350	$0
Add-on insurance	none	$900 rolled in
Amount borrowed	$15,350	$15,900
Weekly repayment	about $93	about $106
Total repayable	about $19,400	about $22,000

Offer 2 can look better at first glance because it has no establishment fee, but the higher rate and the rolled-in add-on cost more across four years. The numbers are made up for illustration. Rates and fees vary, so use the repayment calculator on the real figures.

Red flags

• A form that asks for banking passwords. A lender may ask you to share statements, but never your login details.
• A fee asked before an offer.
• No registration number or details on the Financial Service Providers Register.
• A promise before anyone has seen your income. Nobody can promise approval.
• A weekly price with no total.
• A lender that wants your documents sent by social media message.

How Fair Finance helps

Complete one online application and we run one soft credit check, which does not affect your score. We pass your details to a panel of approved New Zealand lenders and show you the ones that fit. You are not tied to any dealer, and you can buy at a yard or privately. Each lender decides case by case, and nobody can promise approval. Use the quick check to start.

Checklist

• Decided which route to use, and compared at least two
• Checked the lender on the Financial Service Providers Register
• Found out whether the form runs a soft or hard check
• Photo ID and proof of address ready
• Three months of bank statements saved as PDFs
• List of regular costs written down
• Offer read for total repayable, fees and add-ons
• PPSR check planned for the car

General information only, not financial advice. Rates, fees and lender rules change, so check the official pages below.

Sources

• Consumer Protection: Loans and lenders
• Consumer Protection: Credit checks, scores and history
• Consumer Protection: What lenders must do
• Sorted: Car loans