Non-bank lenders and car finance in New Zealand
A non-bank lender is any finance provider that is not a bank, such as a finance company, a lender owned by a dealer group or a peer-to-peer service. They follow the same lending law as banks, but their rates, fees and appetite for risk can look quite different. Nobody can promise approval with either type, and the sensible move is to check any lender before you apply.
The short answer
In New Zealand, you can borrow to buy a car from a bank or from a non-bank lender. The Consumer Protection site run by the government says secured loans, where the lender holds the car as security, “could be through your bank or a non-bank lender.” Neither type is automatically safer or better. What matters is the rate, the fees, the total you repay and whether the lender is properly registered.
If you are asking because a bank said no, or because your credit file has marks on it, you are in a common situation. Many people end up with a non-bank lender for that reason. This page explains who they are, what is the same and what differs, and how to avoid the bad ones.
Fair Finance is a referral service, not a lender and not a financial adviser. This is general information, not advice on your situation.
What counts as a non-bank lender
The label covers several kinds of business:
- Finance companies that lend for cars, trucks and other vehicles, often through dealers and online.
- Lenders linked to a dealer group or a car brand. These are sometimes called captive finance arms, and they may offer special deals on certain cars.
- Online lenders that take applications on a website and assess them with their own models.
- Peer-to-peer services, where the money comes from investors. The Consumer Protection site says these should be licensed by the Financial Markets Authority.
- Credit unions and building societies, which are not banks but are often grouped with them by borrowers. The Sorted guide to car loans suggests including banks and credit unions in your comparison.
We have not named companies on purpose. A company’s name on a list tells you nothing about whether it will lend to you, and approval depends on your own situation.
What is the same as a bank
Lending law does not care what kind of lender it is. All consumer credit lenders in New Zealand must:
- Be registered on the Financial Service Providers Register. The Consumer Protection site warns that unregistered lenders cannot legally give credit, and an unregistered lender cannot charge interest, default fees or other borrowing costs.
- Belong to an approved dispute resolution scheme. There are four such schemes, and you can complain to the one your lender belongs to if the lender’s own complaints process does not fix the problem.
- Assess affordability. Under the Credit Contracts and Consumer Finance Act, the lender must make reasonable inquiries and be satisfied you can make repayments without substantial hardship.
- Give you a disclosure statement before you sign. It must show the total amount to repay, all fees, the asset used as security and how to apply for hardship or cancel. If the statement is missing or incorrect, the lender cannot charge fees or interest for that period.
- Charge only reasonable fees. Loans with interest of 50 percent a year or more are treated as high-cost, with limits on interest and fees.
So a non-bank lender is not an unregulated one. The protections on paper are the same, which is why it is worth knowing how to use them. Our page on how to complain about car finance walks through the steps.
What often differs
The rules match, but the businesses do not. In general terms:
- Risk appetite. Banks usually have tighter rules about credit history, income type and the age of the car. Non-bank lenders are often willing to look at borrowers and vehicles a bank would decline, such as an older car, a newer job or past defaults.
- Price. Greater risk usually means a higher interest rate, a higher establishment fee, or both. Our guide to car finance interest rates explains why rates differ so much between borrowers.
- How you apply. Many non-bank lenders work online or through dealers, and some focus on the car trade.
- Security. Most car loans from either type are secured against the car, which means the lender can repossess it if you fall behind. See secured vs unsecured car loans.
These are patterns, not rules. Some banks lend to people with imperfect credit, and some non-bank lenders offer very competitive rates to borrowers with strong files. The only way to know is to compare actual offers.
A worked example (illustrative numbers only)
Say you are borrowing $15,000 for four years. The rates below are made up to show the effect. They are not quotes.
| Lower-rate offer | Higher-rate offer | |
|---|---|---|
| Loan | $15,000 | $15,000 |
| Illustrative rate | 10% a year | 18% a year |
| Monthly repayment | about $381 | about $441 |
| Total repaid | about $18,260 | about $21,150 |
| Extra cost over four years | about $2,900 |
Neither offer is “the non-bank one” or “the bank one”. The point is that the rate difference over a few years is real money, and that you can only see it if you compare. Add the fees to each, then ask for the total amount to repay. The repayment calculator lets you test your own numbers.
If a higher-rate offer is the only one open to you right now, it may still be the right choice. Ask whether there is a way to improve your position first, such as a larger deposit or a few months of clean repayments, and whether the loan lets you pay it off early without a break fee.
How to check a lender before you apply
- Search the name on the Financial Service Providers Register. The register is run by the Companies Office and shows the provider’s FSP number, address and the dispute resolution scheme it belongs to. If you cannot find the lender, do not borrow from it.
- Check what the entry covers. A business that lends should be registered for providing credit. If the entry shows something unrelated, ask the lender to explain.
- Read the complaints process. Every lender must have one. A lender that hides it is a warning sign.
- Look at independent feedback. The Consumer Protection site suggests checking online reviews and asking friends and family. Treat reviews on the lender’s own site with caution.
- Ask for the disclosure statement early. You should see the total repayable, the fees and the security before you commit.
- Compare more than one offer. The standard terms and costs of a lender must be publicly available, so you can compare them.
Why there is no honest “list near me”
Search results for lists of car finance companies are mostly directories, lender blogs or pages that rank the companies that pay for a place. Most of these lenders work online or through dealers across the country, so “near me” rarely matters for who can lend to you. What matters is whether a particular lender suits your income, your credit file and the car.
If you want to see several lenders without filling in several applications, that is what a panel does. Our page on how a car finance broker works explains the options and how a referral service differs from a broker or a dealer.
Red flags with any lender
- An offer of approval before they have seen your income or credit file. Nobody can promise approval.
- A lender you cannot find on the register.
- Fees that arrive only after you have agreed.
- No total repayable in writing.
- A very high interest rate with a very low weekly payment. See our page on weekly payments.
- Pressure to sign today.
- A request for an upfront fee before any loan is made. Walk away and tell the Commerce Commission or the Financial Markets Authority if you think a lender is breaking the rules.
How Fair Finance helps
Fair Finance sends one application and one soft credit check to a panel of approved New Zealand lenders, so you do not have to apply to each one yourself. A soft credit check does not affect your score. We are paid by the lender only if a loan settles, and that never changes your rate. Each lender decides case by case, and nobody can promise approval. We are not a lender, so we are neither bank nor non-bank. Start with the quick check, or read about bad credit car finance.
Checklist
- Lender found on the Financial Service Providers Register
- Dispute resolution scheme noted
- Rate, every fee and total repayable in writing
- Disclosure statement read before signing
- At least two offers compared
- Early repayment and break fee terms checked
- Complaints process located
- PPSR check done on the car
General information only, not financial advice. Rules, rates and lender products change, so check the official pages below.
Sources
Common questions
What is a non-bank lender?
It is a company that lends money but is not a registered bank. In car finance that usually means a finance company, a lender linked to a dealer or manufacturer, or an online lender. The government's Consumer Protection site says a secured loan can come from your bank or from a non-bank lender.
Are non-bank car loans more expensive than bank loans?
Often, though not always. Lenders price for risk, and a borrower with a thinner credit history or a defaults record is usually offered a higher rate and sometimes a larger fee. Compare the rate, every fee and the total amount repayable on each offer.
Are non-bank lenders regulated in NZ?
Yes. Any lender providing consumer credit must be on the Financial Service Providers Register, follow the Credit Contracts and Consumer Finance Act, and belong to an approved dispute resolution scheme. Unregistered lenders cannot legally give credit.
How do I check a car finance company is legitimate?
Search its name on the Financial Service Providers Register, which shows its registration and the dispute resolution scheme it belongs to. Then read the disclosure statement before you sign. Walk away from anyone who will not give you the total repayable in writing.
Is there a list of car finance companies in NZ?
There is no single official list of car finance lenders, and the lists you see online are mostly marketing or directories. The Financial Service Providers Register is the place to check a specific company. If you want to see several lenders at once, an application through a referral service goes to a panel.
Can a non-bank lender approve me after a bad credit history?
Some non-bank lenders consider applications that a bank would decline, often with a deposit or a higher rate. Lenders decide case by case, and nobody can promise approval. Our bad credit guide explains what they weigh up.
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.