Car finance for returning Kiwis

The short answer

You are a citizen coming home, but to a lender you may look like someone arriving for the first time. New Zealand credit bureaus keep New Zealand files. If you have spent years overseas, there may be little recent activity on yours, so the lender has to lean on other evidence about you.

That is a different problem from bad credit. It is closer to having no credit history, and many of the same steps apply. This page covers the parts that are particular to coming back: what stays on your old file, what lapses, and what to line up before you land.

Citizen, resident or something else

Your status shapes the paperwork.

• New Zealand citizens. Immigration New Zealand says citizens have an automatic right to enter and live in New Zealand without a visa. You prove citizenship at the border with a New Zealand passport or a foreign passport carrying a citizen endorsement. A lender will usually want to see photo ID.
• Residents returning. If you hold residence rather than citizenship, your visa conditions decide your right to stay, and a lender will want to see them. Check with Immigration New Zealand.
• Partner or children on a different visa. If you are applying jointly, the other person’s status and income are assessed too. Our page on joint car loans explains how that works.

If you are a new arrival with a work visa instead, see car finance for new migrants, which covers a different path.

What a lender can see, and what it cannot

New Zealand has three credit reporting companies: Centrix, Equifax and Experian (formerly illion). Consumer Protection says lenders may use whichever they choose. Each holds its own file on you.

Equifax’s retention table shows how long different items stay:

• Enquiries: four years.
• Account repayment history: up to 24 months.
• Defaults and judgments: five years. A default stays even if you pay it later.
• A single bankruptcy or No Asset Procedure: four years from discharge. Multiple insolvencies may be held indefinitely.

Two things follow for a returner.

1. Your good record may have gone. If your last New Zealand loan or card was more than two years ago, there is little positive repayment history left to show.
2. An old problem may not have gone. If you left with a default or judgment less than five years ago, it can still be on your file. A current bankrupt is not someone we can help. After discharge or after a No Asset Procedure ends, the situation changes. See how long defaults stay.

Overseas history is different. The Equifax Australia story of a returning expat describes her Australian record as effectively wiped off after nine years in New Zealand, and a bank there turned down a card because she had been away too long. That is one person’s account, not a rule for every lender. We have not found an official statement on whether a New Zealand bureau ever picks up an overseas file, so the sensible move is to ask the lender directly.

Get your reports before you land

You can ask each bureau for your report from overseas. Consumer Protection says the companies should respond within 20 days or explain the delay, and you are entitled to a free copy from each. Sorted says Centrix takes about one working day and Equifax about ten, and that scores are usually not part of the free report. Our guide to getting a free credit report walks through it.

Read for three things:

• An old default, judgment or overdue account you had forgotten.
• Mistakes, including accounts that are not yours. Identity theft can happen while you are overseas.
• How empty the file is. An empty file tells you what the lender will see.

If something is wrong, contact the organisation that supplied it, then the bureau. If a bureau will not fix a genuine error, you can complain to the Privacy Commissioner.

What lenders look at instead

When the credit file is thin, other things carry the weight:

• A job. Payslips or a signed employment agreement. Lenders look for proof you can afford the repayments, and they must make reasonable inquiries to be satisfied of that.
• Local bank history. A New Zealand account with a few months of statements shows income arriving and bills going out.
• A stable address. A tenancy agreement or a recent bill in your name.
• A deposit. A bigger deposit means a smaller loan against the same income.
• A sensible car. A reliable, reasonably priced car is easier to place than a stretch purchase.

Some lenders also look at whether you have a partner or family member who could be a co-borrower. A joint application can help if that person has a New Zealand credit history, but they become responsible for the loan too.

What to line up before you land

Work backwards from the day you want the car.

1. Months before: order your reports, fix errors and clear anything overdue.
2. Six to eight weeks before: confirm the job in writing. A signed employment agreement can bridge the gap before your first payslip, if the lender accepts it.
3. Before you travel: set up a New Zealand bank account if you can, and move money across so statements start building.
4. First weeks home: put utilities, mobile and internet in your name where possible, and pay them on time. This builds a record and gives you proof of address.
5. When you have statements and payslips: make one application, not several. Our soft credit check glossary entry explains how you can see options without a hard enquiry each time.

Do not rush into a deal just because you need a car on day one. Short-term hire, a lift from family or buying a cheaper car with savings can buy you time for a better loan.

Licence note

Lenders often ask for a driver licence, and you need a valid one to drive. NZTA sets how long you can drive on an overseas licence after arriving, and that limit has been changed in recent years. Check NZTA’s page for the current rule for your licence before you assume it. Our page on whether you need a licence for car finance covers what lenders ask.

A worked example

These are made-up numbers, used to show the thinking, so run your own through the repayment calculator.

Say you return after seven years overseas and start a job at the end of the month. You want a $14,000 car and have saved $3,000 for a deposit, so you need to borrow $11,000 over four years.

At an illustrative 15% a year the repayment is about $306 a month. The total over four years is about $14,700, which means roughly $3,700 in interest on top of the $11,000 borrowed.

What the lender sees: a signed employment agreement but no payslips, a New Zealand bank account with six weeks of history, no recent New Zealand credit and a seven-year-old record. Some lenders would want to wait for the first payslips. Others might lend with the deposit and a conservative amount. If you wait two months, you have payslips and a longer statement history, and the same application looks stronger.

Waiting can cost you transport for a while. Weigh that against the cost of a rushed deal at a higher rate.

Red flags

• A dealer who tells you your overseas record will not matter, or that it will. Neither can be known without asking the lender.
• Anyone promising approval before they see your documents.
• Pressure to sign on the day you land.
• Fees that appear late. Ask for the rate, fees and total cost in writing.
• A car with money still owing on it. Do a PPSR check on any used car.
• Unregistered or unclear paperwork if you are shipping your own car home. Check NZTA requirements before you ship.

How Fair Finance helps

Fair Finance is a referral service. It is not a lender, a broker or a financial adviser, and it gives no personal advice. One application and one soft credit check go to a panel of approved New Zealand lenders, so you can see options without a hard check at each one. Each lender decides case by case. Fair Finance is paid by the lender only if a loan settles, and that never changes your rate. Use the quick check to start.

Checklist

• Reports ordered from Centrix, Equifax and Experian
• Errors and old overdue items dealt with
• Job offer or employment agreement in writing
• New Zealand bank account open, with statements building
• Proof of address in your name
• Photo ID and citizenship or residence proof ready
• Licence position checked with NZTA
• Deposit set aside
• Rate, fees and total cost in writing before signing

General information only, not financial advice. Rules and lender policies change, so check the official pages below.

Sources

• Immigration New Zealand: Who are New Zealand citizens?
• Consumer Protection: Credit checks, scores and history
• Consumer Protection: What lenders must do
• Equifax My Credit File: How long is information held in my credit file?
• Sorted: How to check your credit rating
• NZTA: Driving on New Zealand roads