Car yard finance in NZ: how dealer finance works

The short answer

When you ask a car yard about finance, one of three things usually happens. The yard sends your details to a finance company and relays the answer. The yard belongs to a brand with its own finance arm. Or the yard runs its own payment plan for buyers who are turned down elsewhere. Only the third is truly “their money”, and it is rare.

Consumer NZ describes the usual setup: many big brands have in-house finance, and other dealers arrange loans through finance companies, with the lender holding a security interest in the car until it is paid off. That is how most yard finance works. It is not wrong. It just means the yard sits between you and the lender, and that has costs and consequences worth understanding.

Fair Finance is a referral service, not a lender, not a dealer and not a broker. One application and one soft credit check go to a panel of approved New Zealand lenders. We are paid by the lender only if a loan settles, and that never changes your rate. We say so here because the same principle applies to yards: the person arranging your loan may be paid for it, so ask.

How yard finance is usually arranged

At most yards the sequence is the same:

1. You pick a car and the salesperson asks about your job, income and licence.
2. The dealer sends your application to one or more finance companies, often through an online portal.
3. A lender replies with terms. The dealer turns them into a weekly or fortnightly figure.
4. You sign a loan contract with the lender, and a sales agreement with the dealer. These are two separate documents.

The convenience is real. Everything happens in one visit, and the dealer knows which lenders suit which cars. The risk is that the car conversation and the money conversation are blended. A weekly number can hide the price of the car, the interest rate, fees and any extras all at once. Ask for each one separately. Our guide on dealer finance vs broker vs bank sets out the trade-offs side by side.

What the dealer may be paid

Consumer NZ says a dealer who arranges your loan will likely charge a “dealer referral fee”, also called a “broker fee”. The article does not give an amount, and we have not found an official figure, so do not assume one.

Neither is this unusual. Lenders pay referral fees across the industry, and we are paid by the lender if a loan settles. What matters is whether you can see it. Ask the dealer three questions:

• Is there a fee for arranging the finance, and how much?
• Is it charged to me separately, paid by the lender, or added to the loan?
• Does the rate you have quoted me depend on the fee?

The Commerce Commission can be told about fees that look unreasonable, according to Consumer Protection. Fees must be reasonable and relate to the lender’s actual costs. Our dealer markup glossary entry explains how a rate can be nudged up when a dealer controls the quote.

Your rights when you sign

The Credit Contracts and Consumer Finance Act (CCCFA) applies to the lender. Consumer Protection lists what that means in practice:

• The lender must check the loan suits your needs and that you can afford the repayments without substantial hardship, including asking about income and expenses.
• You must be given a disclosure statement in writing, showing the amount owing, the interest rate, fees, any security interest and the consequences of missing payments.
• If disclosure is missing or wrong, Consumer Protection says the lender cannot charge interest or fees for that period, and you can ask for the contract to be changed or cancelled. The FMA notes that since 1 July 2026 courts decide what relief applies for disclosure breaches, so get advice if this happens to you.
• You can cancel the credit contract by telling the lender within five working days of receiving disclosure (Consumer NZ adds seven if it was emailed and nine if posted). If you want the car, you then have 15 working days to pay the cash price. If you have not collected the car, you can cancel the sale as well.

You also do not have to take the loan from the dealer you are buying from; the Commerce Commission says you can borrow from a bank or another lender. Check that the cash price on the loan matches the cash price on the dealer’s Consumer Information Notice, which a dealer must attach to every used car for sale. Look for “free” extras that are quietly paid for inside the loan.

Add-ons to question

Yards often offer extras with the loan. Consumer NZ takes a cautious view of the common ones:

• Mechanical breakdown insurance. Many policies have long exclusions, and Consumer NZ suggests a pre-purchase inspection and regular servicing instead. Our guide to mechanical breakdown insurance explains what to look for.
• GAP insurance. It covers the gap if the car is written off, but needs comprehensive cover. Consumer NZ cites Commerce Commission figures showing nearly $14 million spent on GAP policies in 2020 against just under $2 million paid out.
• Payment protection and credit contract indemnity. Both pay out in limited circumstances such as illness or redundancy, and have long exclusions.
• Tracking or disabling devices. Some lenders fit a GPS device that can immobilise the car after missed payments. It should be on the disclosure statement.

We do not tell anyone to buy or avoid a product. The point is that each extra has a price, and anything added to the loan accrues interest. You can buy insurance somewhere else. Our guide to the real cost of owning a car shows what to budget for beyond the repayment.

A worked example (illustrative numbers only)

Say you are shown a car at a yard for $14,000. The salesperson quotes about $90 a week over five years. Behind that figure, there could be several different loans. The numbers below are made up to show the method.

	Plain loan	Loan with extras and fees
Car price	$14,000	$14,000
Add-ons rolled in	$0	$1,800
Fees rolled in	$0	$600
Amount borrowed	$14,000	$16,400
Illustrative rate	13%	13%
Weekly repayment, 5 years	about $74	about $86
Total repaid	about $19,100	about $22,400

The two weekly figures look close. The totals are not. This is the reason to ask for total repayable, not the weekly price. The repayment calculator lets you test your own numbers. These figures are an example only, and real rates and fees vary.

Compare before you walk in

You do not have to decide at the yard. A cleaner approach is to get a finance estimate first and then shop as a cash buyer. Our guide on getting pre-approved before you shop covers how it works and how long it lasts. Then:

• Ask the yard for its finance terms in writing and compare the total repayable.
• Ask whether the car price changes if you use your own finance.
• Do a PPSR check so you know there is no money owing on the car.
• Take the paperwork home. A genuine offer does not disappear overnight.

If your credit file has marks on it, expect more questions at any yard. The page on bad credit car finance explains what lenders weigh up, and buy here pay here covers yards that run their own payment plans.

Red flags at the yard

• Only a weekly figure, no total. Ask for the total repayable and every fee.
• A rate that applies only if you sign today.
• Extras bundled so you cannot see each price.
• No disclosure statement, or one you cannot read. Consumer Protection says you can cancel if disclosure is missing, incorrect, incomplete or illegible.
• Pressure to pay a cash deposit before the finance is confirmed. Consumer Protection warns that cash deposits are often non-refundable.
• A dealer who says the law does not apply. Under consumer law a dealer-sold car must be of acceptable quality, and the Commerce Commission says sellers cannot avoid being in trade by using agents to sell cars for them.

If things go wrong

Complain to the lender first, then to the lender’s financial dispute resolution scheme if you cannot agree. If you are struggling with repayments, tell the lender early and ask about hardship. Our guide on struggling to pay your car loan lists your options.

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 our panel of approved lenders and show you the ones that fit. You can then shop at any yard, or buy privately, and you are not tied to one dealer. Each lender decides case by case, and nobody can promise approval. Start with the quick check.

Checklist

• Total repayable and every fee in writing
• Asked whether the dealer is paid for arranging the loan
• Loan cash price matches the Consumer Information Notice
• Each add-on priced separately and decided on its own
• Disclosure statement received, and cancel dates noted
• PPSR check done
• A comparison figure from somewhere other than the yard

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

Sources

• Consumer Protection: Getting a loan for your car
• Consumer Protection: Car sales contracts and warranties
• Consumer Protection: What lenders must do
• Consumer Protection: Buying a car from a dealer
• Commerce Commission: Buying a car
• Consumer NZ: Finance at car yards, what you need to know