handing over car keys

Car loan affordability tips

What you need to know before you apply.

Before applying for a loan, it makes sense to assess your financial situation to find out how much money you can afford to borrow.

Here are some tips we’ve put together to help:

Know your budget

Before considering a loan amount it’s a good idea to review your monthly budget. It will help you understand how much you can comfortably allocate towards regular car loan payments without straining your finances. Remember to account for other expenses like rent or mortgage, groceries, insurance, other loan payments including buy now pay later, and utility bills such as power and broadband.

piggy calculator

Calculate total costs

Think about and consider all the costs associated with owning a car, not just the fortnightly or monthly loan payments. This includes things like insurance, fuel, maintenance (including warrant of fitness and registration), and potential repairs. Factor these into your budget to ensure you can afford the total cost of car ownership.

Find out about loan terms

Understand the loan terms, such as the interest rates, loan duration, and any additional fees. To give you an idea of what your car loan payments might look like, check out our handy Car Loan Calculator. You can easily adjust the loan amount, term, and frequency to see your estimated loan repayment amount.

credit score on laptop

Evaluate your credit score

Your credit score plays a significate role in determining the interest rate you’ll receive on a car loan. Firstly, find out what your credit score is. To get a free copy of your personal credit report provided by Centrix Credit Bureau, visit their website here. Check your credit report for any errors and work on improving your score if it’s not in the best shape. A higher credit score can result in lower interest rates and better loan terms.

Save for a deposit

Saving for a deposit can help reduce the loan amount and could lower your repayments. Aim for a substantial deposit to demonstrate financial responsibility and potentially improve your loan terms.

Consider a pre-approval

Getting pre-approved for a car loan can give you a better understanding of how much you can borrow and the interest rate you qualify for. Pre-approval can also streamline the car buying process and give you negotiating power when you’ve found the car you want.

happy driver

Be realistic

Be realistic about the type of car you can afford based on your budget and financial situation. Avoid stretching yourself too thin to buy a more expensive vehicle than you can comfortably afford. Look at your circumstances and how they may change over the next 12 months. Factor this into your decision making.


Ensure that you fully understand the loan and the obligations that you are entering into. Do not be afraid to ask someone you know and trust for assistance, or seek advice from an independent body that deals with finances.

By carefully evaluating your finances and considering these tips, you can determine a car loan amount that fits within your budget without compromising your financial stability.

Know that you are in good hands with us

Oxford Finance is a responsible lender, regulated by the Credit Contracts and Consumer Finance Act (CCCFA). We are a member of the Financial Services Federation and follow their principles on responsible lending and borrowing. Our experienced team of lenders are available to assist and answer any questions you have about applying for a loan – Get in touch with us today, customerservice@oxf.co.nz, www.oxfordfinance.co.nz.