Paying off a car loan? Make sure you’re reviewing it!

review your car loan payments
Paying off a car loan in New Zealand

Reviewing your car loan every now and then is a great idea that could save you a lot of money and reduce the overall cost and term of your loan. 

When it comes to the financing of all types, including car loans, it makes financial sense to regularly review what you're actually paying for. If you've been a good payer and built up a good repayment history with your lender, it’s likely that you could benefit from an interest rate reduction. On the other hand, you might have a little more disposable income available, and you’re considering paying your loan off faster.

Start by reviewing your budget

The first step is to review or set up a budget because it’s so easy to underestimate or even overestimate the repayments that you are able to afford when trying to set up or review your loans. We’re all like that, so excited that we overlook potential problems. It’s never too late to pull out the magnifying glass and take a closer look at your budget and find what isn’t working for you.

What you can do is begin by totalling the costs that your household incurs on a monthly basis, including your running car costs, fuel, oil, etc., but exclude your loan payment. Minus this total from your income, and you’ll be left with a good measure of the amount that you can afford to repay on a monthly instalment.

Adjust the payments to suit your financial position

Our finances are changing all the time. New expenses come up, while certain expenses disappear. That new gym membership costs you more each month, however, since you’re trying to be healthy, you’ve stopped eating out as much. So there are always changes and you may find that your affordability has improved or reduced since the day you first took out the loan.

Restructuring your car loan to meet your changing finances 

Whatever the situation is, it’s vital that you consult with your current provider since they will assist you in understanding the impact and benefit that restructuring your payments could have on your loan.

Increasing your repayments is excellent if you can do so. Increasing payments are a sure way to help you repay your car loan faster and subsequently bring down the total cost of interest included in your finance agreement.

If you’re looking to reduce your loan repayment amount, don’t leave it too late, do so as soon as possible. You have to make your payments on time to avoid accruing a poor credit rating, also your agreement requires that you make your payments on time. Maintaining a clean credit record is vital when you’re after the best interest rates and even more so, to have the ability to borrow money in the future, should you need to.

Check your credit record

Having a sound understanding of your credit score and record, as well as protecting it, is an important factor when choosing to make your car loan work for you. Someone who had a low credit score when originally applying for the loan might have a higher interest rate but now that their record has improved, they are likely to have earned a reduction in their rate.

If you have been meeting your monthly repayments on time and as required since your car loan application was drawn up, this means your credit score is probably up!

Car loan calculator

The interest rate of a loan will vary based on your credit score and risk profile.
This car loan calculator is for illustration purposes only.
The use of this loan calculator is subject to our terms of use.

Research possible interest rates available

Even a minor change in the interest rate you are paying can make a major difference to the total cost of your loan. If and when an interest rate goes down, you may find that you can renegotiate your loan or even move it to another provider without this move negatively impacting your financial position.

How to settle your car loan in New Zealand 

Take the time to consult with your existing provider for the settlement value of your loan if you were to settle it in full prior to calculating the cost of moving your car loan. The reason for this is that there are financiers or banks that will penalise you for early repayment, so it’s best to first double-check the loan transferring policy before you make the decision to move.

Loan terms are not always set in stone 

At the point of signing up for vehicle finance, there’s no need to believe that the structure is fixed until the loan is paid in full. Therefore, rather diarise a regular date to review your position and ensure that you are doing all that you can in order to make your car loan work for you in the best way possible.

Simply by reviewing your credit score and your finances and budget regularly, you are easily able to identify the opportunities, should there be any, where you can improve your car loan and essentially your financial well-being. Most lenders out there recognise that financial circumstances change, hence they are ready and willing to assist you if you approach them to restructure your loan.

Popular & reliable direct lenders offering Car finance

  1. MTF Car loan


    • Loans up to $100,000
    • Term up to 48 months
    • Interest from 12.95%
  2. Finance Now Car loan

    Finance Now

    • Loans up to $20,000
    • Term up to 5 years
    • Interest from 12.95%
  3. Oxford Finance Car loan

    Oxford Finance

    • Loans up to $100,000
    • Term up to 60 months
    • Interest from 12.95%
  4. ANZ Car Loan Car loan

    ANZ Car Loan

    • Loans up to $40,000
    • Term up to 5 years
    • Interest from 13.90%