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8 September 2021 | By Lending People

Legend or lemon? What to look for when buying a car

In the market for a new car? It’s a big investment, especially if you’re getting a car loan. How do you know if you’re buying a good one? Follow our checklist here.

Shopping for a new car can be pretty exciting, but remember, it’s a big investment. Before you drive into the sunset with your new whip, we recommend asking the following questions:

  1. How much can I really afford?
    When it comes to purchasing a car, be realistic about your budget. Remember, it’s not just the car you’re paying for; it’s fuel (or electricity), on-road costs, insurance and maintenance, not to mention any unforeseen mechanical costs—touch wood!

    If you’re going down the finance route, make sure you understand how much the vehicle loan will cost you in total—you’ll need to do some math. Consider the interest, how long you’ll be paying it off and what your regular repayments will be. If you need some help with that, take our online car loan calculator for a spin here.
  2. Am I getting the best car loan for me?
    If you are choosing to finance your vehicle, it pays to do your homework. Ensure you understand the different types of loans available to ensure you’re getting the one that works best for you. You can read our car loan comparison guide here.

    We work with some of New Zealand’s most trusted lenders. If you’d like to see what kind of terms we can offer you, apply for a loan online. It only takes a few minutes, and you’ll have an initial decision on your application in 60 seconds⁵. Regardless of the outcome, you’re under no obligation to follow through with a loan, and our process won’t affect your credit score. If you want to see how our loan compares, apply here.
  3. Am I getting a good deal?
    Found a car you like? Do some research to see what you should be paying for it. A quick Trade Me search should be pretty informative, as will looking around a few car yards. If it’s second-hand, pay attention to the km's it’s done and the year of the model, as this can significantly influence the price of a car.

    Having a clear idea of the going rate for similar cars will help you compare your options and negotiate with confidence! You got this!
  4. Is it economical at the pump?
    Fuel is an ongoing cost to factor into your budget, so you want to make sure you’re not buying something you can’t afford to run. Right Car is a great website that allows you to search for a car by license plate or make and model to see how the car scores on all sorts of things like carbon emissions, air pollution and, of course, fuel economy.
  5. Is it safe?
    Safety isn’t always top of the priority list when shopping for a car—how often do you have a crash, right? The thing is, if you do, you want to be as protected as possible. Checking the car safety rating is a good start—that’s another thing Right Car can help with. NZTA is another good place to visit, particularly if you’re considering buying a second-hand car. They have a great safety checklist, which you can look at here.
  6. Is it a good fit for my lifestyle?
    A Mini might look cute, but it won’t tow a boat. And, if you’re carting around car seats, prams, and porta cots, a bit of extra room wouldn’t go amiss. Think about how you’re really going to use your car for the foreseeable future, then choose accordingly.
  7. Does it have a WoF?
    Any vehicle sold in New Zealand must have a warrant of fitness that is no more than one month old unless the purchaser (you) puts in writing that you’re happy to buy the car regardless. If you agree to this and something goes wrong with the car, it’s your responsibility.
  8. Am I sure I’m not buying a lemon?
    We all know someone who’s unknowingly purchased a dud—you might have even done it yourself. Save yourself some trouble (and cash) by doing your due diligence. Here are some tips:
  • Buy from a reputable dealer - take what the dealer is saying with a grain of salt
  • Don't be afraid to shop around for the car and the finance
  • Get a professional pre-purchase inspection done
  • Check the mileage
  • Check the WoF
  • Ask about the history of the car, specifically any past faults
  • Find out when it was last serviced and by who
  • Test the shock absorbers
  • Check for smoke from the exhaust
  • Check for oil leaks
  • Protect your investment with insurance

This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policies. Information on the blog does not take into account your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans, insurance. Find out more about The Lending People and how we may be able to help you.

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¹All approvals are subject to responsible lending inquiries. If you sign your loan contracts before 3:00 pm on a weekday, you will receive the funds on the same day. While bank processing times differ, funds usually show up in your account by early evening.

²Annual Interest Rate (AIR) and Annual Percentage Rate (APR): Unsecured interest rates range from 13.90% p.a. to 23.90% p.a.

³Minimum and Maximum Repayment Terms: Repayment terms range from 1 year to 5 years.

⁴Fees: Where Lending People is the creditor, we charge a $174 establishment fee. Lending People does not charge a monthly fee or early repayment fee. Where another provider is the creditor, provider-specific establishment fees, monthly fees, and early repayment fees may apply.

⁵Terms and Conditions: Our services are provided in accordance with our Application Terms & Conditions.

Representative Example of the Total Cost of a Loan: If you borrow $10,000 over a repayment term of 36 months at an AIR of 14.95% p.a., your total repayments will be $12,631.60 (made up of $10,000 principal, a $174 establishment fee, and interest charges of $2,457.60). This example is based on amortised scheduled weekly repayments with a fixed interest rate for the term of the loan.

© The Lending People Limited Trading as Lending People (FSP240365) holds a license issued by the Financial Markets Authority (FMA) to provide financial advice services. Click here to view our Disclosure Statement.