Car loans in NZ

As we move into the second half of 2025, New Zealand’s car loan market is showing signs of stabilisation. However, a few challenges remain before we can confidently say the sector is back on track. Here’s a look at the latest data and what it means for borrowers.

Vehicle loan arrears dropped to 5.4% in June, slightly below last year (Centrix). While arrears are trending downward, they remain higher than pre 2024 levels, indicating ongoing financial pressure for some borrowers.

• The average vehicle loan size is approximately $22,700, continuing an upward trend
• Over 20% of new borrowers financed between $10,000 – $15,000.
• Average borrower age is 42, with 19% under 30 and 26% aged 50+.
• Average credit score among vehicle loan borrowers is 667, well below the national average of 744.
  (Centrix)

• Vehicle loan applications are up by 0.7% from last year
• New non-mortgage lending including credit cards, vehicle and personal loans, Buy now pay later (BNPL) is up 5.5% year-on-year, driven largely by personal and vehicle loans
  (Centrix)

Despite economic pressures, demand for vehicle financing remains strong, supported by interest rate cuts and consumer needs. We anticipate demand will continue to increase as more households roll onto cheaper mortgage rates over the next 6-12 months.

• Nearly 15,000 consumer accounts were reported in hardship last month. Up 7.1% year on year
• Hardship breakdown:
  45% related to mortgage payments
  29% to credit cards
  18% to personal loans
• The highest hardship rates are among those aged between 35 and 49.
  (Centrix)

The market is showing early signs of stabilisation, with arrears plateauing and loan volumes increasing, likely influenced by recent interest rate cuts. However, high living costs and tighter household budgets are slowing growth. Younger borrowers are more vulnerable to default, highlighting the need for careful financial planning and lender support.

• Set a realistic budget: Choose a car that fits your financial situation
• Check your credit score: Get a free report from Centrix Credit Bureau here.
• Understand your loan: Know the terms, interest rates, and total payment amount
• Seek support if needed: Money Talks offers free financial mentoring and budgeting advice. Call them on 0800 345 123 or visit their website here.

Oxford’s team of experienced lenders are available to assist and answer any questions you have about applying for a loan. Get in touch with us on 0800 951 015 or apply online today. Alternatively, if have a loan with Oxford Finance and are experiencing an unforeseen change in your financial situation, don’t leave it too late to contact us.