Buying a car is a big decision – one that often comes with a hefty price tag. For most Kiwis, car finance is part of the journey. But here’s a question that could save you money, time, and hassle: should you get pre-approved for car finance before you start shopping?
At Loan Direct, we help New Zealanders get sorted faster with competitive rates, expert advice, and a simple, online process. Whether you’re buying your first car or upgrading the family wagon, understanding how pre-approval works – and the types of loans available – can help you make a smarter financial choice.
What Does It Mean to Be Pre Approved for Car Finance?
Pre-approval means a lender has reviewed your financial information and agreed, in principle, to lend you a specific amount.
It’s not a guarantee, but it gives you a clear idea of your borrowing power before you start negotiating with sellers or dealerships.
This means you can start car shopping with the power of being a cash buyer!
The Benefits of Getting Pre Approved Car Finance
Here’s why pre-approval is a smart first step before you head to the dealership:
1. Know Your Budget
Pre-approval tells you exactly how much you can borrow, helping you shop within your means. It stops you from falling in love with a car that’s out of reach.
2. Stronger Negotiating Power
Sellers take you more seriously when they know you’ve got financing sorted. It’s like walking in with cash—you’re in a stronger position to negotiate price or extras.
3. Faster Buying Process
With finance already lined up, you can close the deal faster and drive away sooner.
4. Avoid High-Interest Dealer Finance
Many dealerships offer their own finance options – but these can come with higher interest rates or unfavourable terms. With pre-approval from a broker like Loan Direct, you’ll likely access more competitive rates.
Are There Any Downsides?
While pre-approval offers plenty of perks, there are a few things to keep in mind:
- It’s a Snapshot: Pre-approval is based on your financial situation at a given moment. Major changes (like job loss or new debts) could affect final approval.
- Credit Check: Some lenders perform a full credit check at pre-approval stage, which may impact your credit score if you apply for other loans at the same time.
- Limited Timeframe: Pre-approvals generally expire after 30–60 days, so you’ll need to act within that window.
Overall, the benefits tend to outweigh the drawbacks—especially when you’re working with expert brokers like Loan Direct who can guide you through the process.
Secured vs Unsecured Car Finance: What’s the Difference?
Secured Car Loan
A secured loan uses the car you’re buying as collateral. This means the lender can repossess the vehicle if you don’t meet repayments.
Pros:
- Lower interest rates – Because the loan is backed by an asset, lenders see it as less risky.
- Higher borrowing limits – You may be able to borrow more, depending on the vehicle’s value.
- Easier approval – Especially if you have bad credit or a shorter credit history.
Cons:
- Risk of repossession – Miss payments and the lender may take the car.
- Limited to vehicle purchases – These loans are usually tied to the specific car you’re buying.
- Depreciation risk – You’re still liable for the full loan even if the car’s value drops over time.
Unsecured Car Finance
An unsecured loan isn’t tied to the car or any other asset. It’s based purely on your creditworthiness and income.
Pros:
- More flexibility – No restrictions on the vehicle you buy. And if you have extra cash leftover, you could use it for whatever you want, like upgrading the car’s stereo.
- No asset at risk – Your vehicle won’t be repossessed if you default (though your credit rating will suffer).
Cons:
- Higher interest rates – Without security, lenders usually charge a bit more to offset the risk.
- Stricter lending criteria – You’ll generally need good credit and stable income to qualify.
- Lower loan amounts – Borrowing limits tend to be lower than secured loans.
Which Car Loan Type is Right for You?
Here’s a quick guide to help you decide:
| Scenario | Best Loan Type |
|---|---|
| You want the lowest possible rate | Secured |
| You have bad credit or limited credit history | Secured |
| You don’t want to risk losing your car | Unsecured |
| You want flexibility with how funds are used | Unsecured |
| You’re buying a car privately or from Trade Me | Either, depending on your financial profile |
At Loan Direct, we offer secured loans from 9.95%* and unsecured loans from 11.95%*. You can borrow up to $75,000 unsecured or $150,000 secured, and we’ll assess your options to find the best fit.
How Loan Direct Can Help
We’re not just a lender—we’re your loan partner. As expert brokers, we work with a network of low-cost lenders to find you the best deal. More lenders means more chances of approval, especially if you’ve been turned away elsewhere.
- Bad credit? Not a deal breaker.
- Fast, 100% online process—no hoop jumping required.
- Expert local advice—from a friendly team that’s got your back.
Apply online in just 2 minutes and get pre-approved in as little as 1–2 hours*. You could be driving away with your new car—and a great loan deal—the same day*.
Ready to get started? Apply online today and see what you’re eligible for in just minutes.
*Subject to responsible lending checks and criteria
FAQs: Pre Approved Car Loans in NZ
A pre approved car loan means a lender has reviewed your financial details and agreed, in principle, to lend you a specific amount. It gives you a clear idea of your budget and borrowing power before you start shopping for a vehicle.
Getting pre approved for car finance helps you set a realistic budget, negotiate like a cash buyer, and avoid high-interest dealer finance. It also speeds up the buying process, so you can drive away sooner.
Pre approvals usually last 30 to 60 days in NZ, depending on the lender. You’ll need to complete your car purchase within this timeframe or reapply.
Secured car finance uses the car as collateral and usually offers lower interest rates. Unsecured car loans aren’t tied to the vehicle and offer more flexibility but often come with higher rates and stricter approval criteria.
Yes, it’s possible. At Loan Direct, we work with a wide network of lenders—including those who consider applications from people with poor or limited credit history.
You can apply online in just 2 minutes and get pre approved in as little as 1–2 hours*, subject to lending criteria.
