How To Apply For Vehicle Finance - Things To Consider

Buying a new car is a very exciting moment for most Kiwis, whether looking at buying new or used, cheap or expensive, getting our hands on a new car can feel like one of life's greatest accomplishments. However in all the excitement we tend to lose focus on the important factors of buying and owning a car. Keeping your finances in check could save you money in the long run and if your loan is pre-approved it could possibly give you an upper hand when negotiating a deal for your next car. Understanding your finances and the process could also prevent any possible hardship in the near future. 

 If you're looking at financing your next car then here are a few things to consider before signing on the dotted line. We are going to run through the entire process with you from start to finish so you can have the upper edge when going through the process yourself. It is very important to understand the options available to you and how the process works so you can make a clear and informed decision before you borrow.

 Who can apply for finance?

Majority of New Zealanders are eligible to apply for finance as long as you some of these specific requirements:

• You are 18 years of age or older
• You are a NZ citizen, resident or on a valid work visa
• Have a valid driver’s license 
• Have a stable income source (you can be self employed or be receiving money from a third party like WINZ or IRD)
• Have a reasonable credit score (defaults on your credit can affect your application and the interest rate offered to you, check your own credit to have a better understanding of your score)
• Have a guarantor (If Needed, generally for high risk profiles or first time borrowers)

 If you feel like you fit the requirements then we can go ahead and look at the next steps which will run through the documents required to apply for a finance pre-approval. A good idea before going through these next steps would be to sit down and look at your finances.  Write down your current income amount along with all your outgoings to figure out what you're left with each week. Is it enough to service a weekly/ fortnightly or monthly loan payment? Always allow for additional expenses such as vehicle maintenance, WOF and fuel costs or any emergency expenses which could occur in the unforeseen future.

 The requirements for applying for finance pre-approval (docs+ criteria)

In this section we will run through everything that is required to get your application started. Having everything prepared and in check will not only speed up the application process but also if you understand your finances then you should by now have a fair indication on the likelihood of a loan approval. 

• Finance application form - This will generally be required by most lenders, some will have online portals which you can apply through, others may send you an application via email or run through everything over the phone and help you fill the form out. The application form will run through and ask for your personal details, co-borrower or guarantor details  (if needed), references (can be any friend or family member not living with you), income, outgoings/expenditure, assets and liabilities. Fill out this form to your best knowledge and as honestly as possible as it will help keep the process smooth and simple.
• Driver’s license - Learners, Restricted or Full. A front and back image will be required, the easiest option is to take clear photos and upload via online portal or send via an email. If you're currently on a learners license and can sit your restricted then we highly recommend getting this done as with a learner license you may require a co-borrower or a 20% deposit and the interest rate offered will be much higher as opposed to a restricted or full license driver.
• 3 months bank statements - These need to be as recent as possible and for all accounts being operated by you. It's as simple as downloading PDF files from your online banking and uploading via an online portal or email, alternatively the lender may send you a bank link or you can request one from them. (Please note any co-borrowers or guarantors may be required to upload these as well).
• X2 recent pay slips/ income statement - These can be obtained from your employer or IRD and WINZ if on income benefit.
• Proof of address - If your bank statement has your current address on it then you should be okay. If not you may provide any utility bill such as phone, power, internet or insurance statement with your name address and date on it. (Statement must be as recent as possible).
• Deposit amount - Most lenders now will accommodate a zero deposit loan, however if you have money to put down towards your loan it may increase your chances of a approval and also reduce the loan term which could mean the total amount paid back could be a lot less then with no deposit. The deposit amount can be what's comfortable for you, however in certain cases the lender may request for a 20% deposit. 
• Trade in your current car - If you're looking at selling your current vehicle then this can be treated like a deposit. Firstly you will need to determine how much you could potentially get for your trade vehicle and whether you're looking at trading in to a dealer who will tell you how much they are willing to offer or look at the options of a private sale. Our blog post (“How to get the most value for your trade”) can help determine the best option for you.

Visa applicants - Please note that if you are on a working visa you will require all of the above and also the items noted below:

• Front and back image of your international license (if you don't hold a NZ license). A condition 1 noted on the back of your NZ license means you are basically treated like a learner driver and you may require a 20 % deposit or a co-borrower.
• Copy as passport and entry stamp (if applicable). Clear photos can be taken and uploaded online.
• Copy of visa (Tip: certain lenders may look at increasing your loan term past your visa expiry date if you're looking at keeping your payments down, this is generally determined by your current status and is only possible with certain lenders).

 Now that we have gone through the nitty gritty and you're feeling a bit more confident with the process we can look at the options of applying for loan pre-approval. Applying for a loan pre-approval has many benefits such as knowing exactly how much you can borrow before heading out on the hunt for your new car, the amount you will paying each week/ fortnight or month, the total loan amount borrowed for the specified loan term, give you an upper hand when negotiating the deal and a quicker turnaround to get the keys in your hand as the funds are there ready to go.

 Tip: With so many different finance companies out there our recommendation would be to shop around to see which lender is offering you the best deal. A key focus here is to try to get your interest rates down as low as possible. Yes every lender will tell you that interest rates are based on your profile which isn't wrong, however if your profile is good and you have a good credit score then there is no reason for a high interest rate. 

 If you're ready to apply or need further assistance with the process then we may be able to help you out. Our company has access to several lenders, all of which are in line with our company principles which is to help our people and also to try and provide the best deal/rates possible to our customers. At Smpl Kiwi we are not finance brokers or a car dealer, we work for you trying to get you the best deal possible on your next purchase and help save you endless amounts of time and money. You can reach out to us for a no obligation chat to see how we can help you with this journey. Either follow this link to our website https://www.smplkiwi.co.nz/pages/contact-us or leave a comment below with your details and we will get back to you.

 Happy Cruising