How much can you borrow for a car loan in New Zealand?
There is no fixed formula or minimum income. Each lender checks that you can repay without substantial hardship, so the amount depends on your income, your spending, your other debts, your credit file and the loan term. A better question to start with is how much you can afford each week once the car's running costs are included.
The short answer
There are two answers to this question, and they can differ.
- What a lender will lend. The lender has to be satisfied you can repay without substantial hardship. It makes that call from your income, spending, debts and credit file.
- What you can comfortably afford. This is usually lower than the lender’s figure, because you also pay for fuel, insurance, registration and servicing.
Plan around the second number. The lender’s maximum is a ceiling, not a target.
Fair Finance is a referral service, not a lender. One application and one soft credit check go to a panel of approved New Zealand lenders. Lenders decide case by case, and nobody can promise approval.
How lenders decide
Under the Credit Contracts and Consumer Finance Act, a lender must make reasonable inquiries so that it is satisfied you are likely to repay without substantial hardship. The FMA says the Responsible Lending Code guides how lenders do this, though the Code is not binding and is not a fixed formula. That is why no two lenders give the same answer.
In practice they look at:
- Income, and whether it is regular and likely to continue
- Spending, including rent or board, power, phone, food, childcare and subscriptions
- Existing debts, such as other loans, credit cards, buy-now-pay-later and hire purchase
- Your credit file, including defaults and missed payments
- The loan, meaning amount, term and the car
If a lender cannot work out that the loan is affordable, it should not lend. That protects you as well as them.
Start from the weekly figure
Most people think about a car loan in terms of the car’s price. A safer approach is to start from the repayment you can carry.
- Write down your take-home pay for a month.
- Subtract your essential costs: housing, food, power, phone, insurance, existing debts.
- Subtract a buffer for surprises, such as a repair or a bill.
- What is left is the most you could put towards the car in total, including running costs.
- Take off fuel, registration, warrant of fitness, insurance and servicing. The remainder is your repayment ceiling.
Our guide to what a car really costs to own lists the running costs people forget. Sorted also tells borrowers to decide how much they really want to spend before they shop, and to include annual running costs, insurance and maintenance.
What a weekly repayment buys
This table shows the size of loan that different weekly repayments support at an illustrative 14 percent interest rate over four years. Real rates and fees vary, and your offer could be higher or lower.
| Weekly repayment | Approx. loan size |
|---|---|
| $50 | $7,900 |
| $100 | $15,900 |
| $150 | $23,800 |
| $200 | $31,700 |
| $230 (about $1,000 a month) | $36,600 |
A longer term lowers the repayment but raises the total interest. A five-year term at the same rate would let $100 a week support about $18,600, but you would pay more in interest over the life of the loan. Use the repayment calculator to test your own figures.
”How much car on $1,000 a month?”
If you mean a repayment of $1,000 a month, the table suggests a loan of around $36,600 at the illustrative rate and term. That is before fuel, insurance, registration and servicing, which can easily add several hundred dollars a month. If you mean $1,000 a month in total car spending, the loan will be smaller. Decide which you mean before you shop, and ask the lender to check the figure against your real income.
”How much can I borrow on a $60,000 salary?”
A salary figure alone does not answer this. Lenders look at take-home pay, which is lower after tax, ACC levies and any KiwiSaver contributions. As a rough, illustrative guide, take-home on $60,000 is in the region of $3,900 to $4,000 a month, but it depends on your tax code and KiwiSaver rate. Use the calculators at ird.govt.nz for your own figure.
From that take-home pay, a person with low rent and no debts can usually carry a bigger repayment than someone with the same salary, high rent and two other loans. That is why two people on $60,000 can be offered different amounts.
Your first job or a short work history
Starting out, the problem is usually evidence rather than income. A lender wants to see that the income is real and will continue. Helpful documents:
- Your employment agreement, showing hours and pay
- Recent payslips
- Bank statements showing the pay arriving
- A letter from your employer, if you are still on a trial period
A short history can lead to a smaller loan or a request for a deposit. If you have no credit history, read our page on first car loans with no credit history. If your income is casual or varies week to week, see car finance for casual workers.
Ways to improve your borrowing position
- Reduce other debts first. Paying off a card or a small loan frees up room in the budget.
- Save a deposit. It lowers the loan size. See how much deposit you need.
- Choose a cheaper car. A smaller loan is easier to place and easier to live with.
- Fix errors on your credit file. Check it before you apply. Our guide on improving your credit score before car finance explains how.
- Pick a shorter term if you can afford it. The repayment is higher, but you pay less interest overall.
If the numbers do not work yet
Sometimes the honest answer is to wait or borrow less. MoneyTalks is a free national helpline run by FinCap on 0800 345 123 that connects people with financial mentors. A mentor can go through your budget with you at no cost. Sorted also has free guides on budgeting and car loans.
Red flags
- A lender or dealer who offers a figure before checking your income. Responsible lenders ask first.
- A loan stretched over a very long term to make the weekly figure look small. You may owe more than the car is worth for years.
- Add-ons rolled into the loan. They raise what you owe and the interest you pay.
- Pressure to borrow the maximum. You do not have to.
- Anyone promising approval before seeing your income and credit file.
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 see what is realistic before you shop. Start with the quick check.
Checklist
- Take-home pay worked out for a month
- Essential costs and existing debts listed
- Running costs of the car estimated
- Weekly repayment ceiling set
- Payslips, agreement and three months of bank statements saved
- Credit file checked for errors
General information only, not financial advice. Rates, rules and tax settings change, so check the official pages below.
Sources
Common questions
How much income do I need for a car loan in NZ?
There is no official minimum. Each lender sets its own approach, and what matters is whether your income covers your spending and the repayment with room to spare. Lenders decide case by case, and nobody can promise approval.
How much car can I afford on $1,000 a month?
If $1,000 a month is your repayment, an illustrative 14 percent rate over four years supports a loan of roughly $36,000. That leaves nothing for fuel, insurance, registration or servicing, so be sure the full cost of the car fits your budget as well.
How much can I borrow on a $60,000 salary?
There is no set multiple. Lenders look at your take-home pay, your regular costs and your debts, not just the salary figure. Someone with few commitments may be able to support a bigger repayment than someone with the same salary and several debts.
Can I get a car loan in my first job?
Sometimes. A short work history can mean a smaller loan, a deposit request or more questions about whether the job is ongoing. Payslips, an employment agreement and bank statements help show the income is real.
Does a bigger deposit let me borrow more?
A deposit reduces the amount you need to borrow, which can make the application easier to place. It does not change the affordability test, which is based on your income and spending.
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.