Say the car costs $35,000 and you put down a $5,000 deposit or trade-in. That leaves $30,000 to finance. At a secured car loan rate of 11.95 percent over 5 years, the repayment works out to about $154 a week, which is roughly $667 a month. The amount financed, not the sticker price, is what the repayment is built from, so a bigger deposit lowers every payment.
Across the full 5-year term you repay about $39,995 in total. Subtracting the $30,000 financed leaves $9,995 of interest, so the loan adds close to ten thousand dollars to the cost of the car. Because a car loses value over those years, a shorter term with higher weekly payments saves a meaningful chunk of that interest. Establishment and ongoing fees, common on car finance, are not included here and add to the real cost.
How it is calculated
The calculator first works out the amount financed, which is the vehicle price minus your deposit or trade-in. It then applies the standard amortising-loan formula: the annual rate is divided by 12 for a monthly rate, the term is multiplied by 12 for the number of payments, and a fixed monthly repayment is set so the balance reaches zero on the last payment. The weekly figure is that monthly amount scaled to a week. Total interest is the sum of all payments minus the amount financed. A secured car loan uses the vehicle as security and usually carries a lower rate than an unsecured personal loan, but the lender can repossess the car if you default. The model assumes a fixed rate and excludes establishment fees, so the true cost will be a little higher.
Frequently asked questions
Secured or unsecured car loan?
A secured car loan uses the vehicle as security and usually has a lower rate than an unsecured personal loan, but the lender can repossess the car if you default. Watch for establishment fees, and remember a car is a depreciating asset, so a shorter term with higher repayments costs less interest overall.
Is car loan interest tax-deductible in New Zealand?
For personal use, car loan interest is not deductible. If you use the vehicle partly for business, you can claim a portion of the interest as a business expense under IRD guidelines. The business-use percentage is calculated from a logbook kept for at least 90 days. GST on the interest component is not reclaimable on personal finance.
Does KiwiSaver affect a car loan application?
KiwiSaver balances cannot be withdrawn to buy a car, as the first-home withdrawal and hardship rules do not cover vehicle purchases. Lenders do view KiwiSaver as a positive savings signal when assessing creditworthiness, but the balance is not counted as accessible funds in the standard debt-to-income calculation.
What fees do New Zealand car lenders typically charge?
Most lenders charge an establishment fee of $150 to $400 and a monthly account-keeping fee of $5 to $15. The Credit Contracts and Consumer Finance Act 2003 (CCCFA) requires lenders to disclose all fees upfront. Early repayment fees are allowed but must be reasonable. Always request the full disclosure statement before signing so you can compare the true annual cost across lenders.