Car finance with missed payments or arrears on your credit file
Late payments can show on your credit file even when you have no default, and some lenders can see them month by month. That makes recent behaviour matter more than most people expect. Nobody can promise approval, but a clean run of on-time payments from today, a smaller loan and a plain explanation all improve your position.
What “arrears” means on a credit file
Arrears is the plain word for a payment that is behind. You were due to pay on the 10th and did not, or paid only part. It might be a car loan, a credit card, a phone plan or a power bill.
This page is for the person in the middle ground. You have a pattern of late payments, but nothing has been listed as a default or a court judgment. If you do have a default, read car finance with defaults first, because that is a different problem with different rules.
The middle ground matters because lenders read it differently. A default is a single, clear signal. Late payments are a trend, and a trend can be shown to be getting better.
Fair Finance is a referral service, not a lender. We cannot promise approval, and nobody honestly can before a lender has seen your full application.
How late payments get onto your file
New Zealand credit reports have traditionally been built mostly from bad news: enquiries, defaults, judgments. That changed with comprehensive credit reporting, where lenders can also report how you handle accounts each month.
According to Centrix and Equifax, a comprehensive report can include up to 24 months of repayment history, along with the account type, its status and the credit limit. ASB describes it as monthly reporting of whether a required repayment was made on time. Equifax says only registered credit providers, telecommunications providers, retail gas and power utilities and insurers (for defined purposes) can provide or see this data, and industry rules can narrow access further.
Two practical points follow.
- Not every lender sees it. Centrix says a lender can only access this data if it shares payment information on its own customers. A lender that does not take part sees the older style of report.
- It is a rolling window. Month 25 drops off. Each on-time month pushes the oldest late month closer to the edge.
The sources above do not set out how many days late counts as a late mark, so do not rely on a rule of thumb you read somewhere. Ask the bureau or the lender how your own account is being reported.
What a lender does with it
Under the Credit Contracts and Consumer Finance Act (see CCCFA) a lender has to make reasonable enquiries so that the loan is suitable and affordable. Your repayment history is one input, alongside your income, your costs and the car.
Roughly, a lender asks three questions of a pattern of late payments.
- Is it recent? Two late months last winter and twelve clean months since reads very differently from two late months last month.
- Is it getting worse? Late by a few days, then a few weeks, then missed entirely is a bad direction. The reverse is a good one.
- Is there a reason that has passed? A job loss, illness or relationship split that is now sorted is a reason a human underwriter can weigh. A note from you, kept short and factual, can help.
Missed payments on a car loan itself look worse than on a phone plan, because it is the same kind of debt you are asking for again.
Step 1: pull your file and read it
You cannot fix what you have not seen. Get your file from Centrix, Equifax and Experian (formerly illion). Each holds its own record, and a late mark on one may not appear on another.
Look for these, in this order.
- Anything that is wrong. A payment shown late that you made on time, an account that is not yours, a debt that was paid. You can ask the bureau and the lender to correct it, and the lender should check its own records.
- Anything that is already settled. A bill you caught up on should show as current.
- The newest late month. That date starts your clock. The more clean months after it, the better.
Write a one-paragraph summary of what happened and what changed. You may never need it, but having it makes any conversation shorter.
Step 2: stop the pattern before you apply
Applying while you are still falling behind is the single most common mistake. A lender looking at your latest month sees a problem that has not stopped.
- Pay current bills on time for as long as you can first. Even three or four clean months show a direction.
- Set up automatic payments a day or two after your pay lands, so the money is there when the bill comes out.
- Talk to the creditor you are behind with. The Consumer Protection website says all lenders must have a hardship application process, and a lender must give a decision with reasons within 20 working days. It also warns there are time limits, for example being less than two months behind, so ask early.
- Get free help. MoneyTalks (0800 345 123, or text 4029) connects you with a financial mentor who can build a budget and talk to creditors. Our page on struggling to pay your car loan covers your rights.
Ignoring a debt can lead to collection, credit reporting, court action and, in the end, a judgment debt. That is the road from arrears to a default.
A worked example (illustrative only)
These are round, made-up numbers, not a quote.
Say your take-home pay is $900 a week. Rent, power, food, phone and transport come to $700, and you pay $60 a week to catch up on a credit card. That leaves $140.
You are looking at a $6,000 car with no deposit. At an example rate of 24.95% over 36 months, repayments would be roughly $238 a month, or about $55 a week. Before fuel, rego, insurance and repairs, that leaves $85.
Now change two things. Wait until the card is caught up, which frees the $60. Save a $1,500 deposit, so you borrow $4,500: roughly $179 a month, or $41 a week. The margin goes from $85 to about $159, and the file has three more clean months on it.
The lesson is that waiting and a bigger deposit change the lender’s view as well as your costs. Use the repayment calculator with your own figures.
What lenders on a panel tend to weigh
- Time since the last late payment. The longer the better.
- The size of the arrears. A $40 phone bill late is not a $3,000 loan late.
- Whether you are current now. Behind today is a bigger problem than behind last year.
- Your income and how steady it is. Wage slips and three months of bank statements.
- The loan size against the car’s value. A modest car and some deposit leave less room for trouble.
- A joint applicant. See joint and guarantor car finance, including the risk to the other person.
Red flags
- Offers that say your credit does not matter. Real lenders must check affordability. Treat that wording as a warning.
- Paying a fee to “repair” your credit file. A genuine error is fixed by asking the bureau and the lender to correct it, and no company needs to be paid to do that.
- Taking a loan to cover earlier arrears with a car as security. If it fails, the car is at risk.
- Many applications in a short time. Each hard check is recorded. A soft check shows where you stand without that mark.
Cheaper routes to consider first
If a loan is not urgent, catching up first is cheaper than any rate you will be offered. If you need a car for work and cannot wait, Work and Income may help in some cases, and Good Shepherd runs no-interest loans for people who qualify. Our benefit options hub lays out the order to check things in.
If you are behind on a car loan right now
Tell the lender before things escalate. Consumer Protection says you can ask for your payments to be spread over a longer period, a payment holiday until a set date, or interest-only payments for a set time. If hardship does not apply, you can still ask for help, get advice from a free financial mentor, or return the car, which leaves you owing money but without penalty interest or repossession costs.
If the lender will not help, it has a financial dispute resolution scheme you can complain to about unfair conduct. A lender can only repossess if the contract allows it, you are behind or in breach, and it has sent a warning notice at least 15 days before.
Fixing this first matters for a new application too. Lenders look at recent behaviour, and a car loan with a variation agreed in writing and then paid on time reads better than a run of missed payments.
How Fair Finance helps
You fill in one form. We run one soft credit check, which does not affect your score, and refer you to lenders on our panel that look at situations like yours. A hard check only happens later, and only if you choose to go ahead with a specific lender. If waiting a few months would clearly help, we will say so. Start with the eligibility check or see how it works.
General information only, not financial advice. Credit reporting rules are set by the Privacy Commissioner and change, so check the official pages below.
Sources
Common questions
Can I get car finance if I have missed payments but no default?
Often yes, though it depends on how recent and how frequent the missed payments are. Lenders decide case by case and nobody can promise approval. A run of on-time payments since the last miss, plus an affordable loan, makes the strongest case.
What is repayment history information on a credit file?
It is a monthly record of whether a required repayment was made on time, held for up to 24 months. Credit bureaus including Centrix and Equifax describe it as part of comprehensive credit reporting. Only lenders and other providers who share their own customers' data can see it.
Is an arrear the same as a default?
No. An arrear is a payment that is behind. A default is a separate, more serious listing that follows unpaid debt after a collection process. You can have late payments without a default, and that is a stronger position than having both.
How do I see my own repayment history?
Ask Centrix, Equifax and Experian (formerly illion) for your credit file. Each bureau holds its own record, and a lender may check one or all three, so look at all of them. The file includes positive data as well as late payments.
What should I do if I know I'm about to miss a payment?
Contact the lender before the due date. Every lender must have a hardship process, and applying early matters because there are time limits. A free financial mentor through MoneyTalks can help you prepare the request.
See your repayments, then get a fair rate.
One application, one soft credit check, no obligation. We match you to the lender most likely to give you a fair go.