Vehicle finance myths busted

Myth: “A bad credit history means you can’t get vehicle finance”

If you’ve thought about applying for finance but secretly dread the credit check, we’ve got some good news. Yes, lenders do prefer a spotless credit history, but plenty of New Zealand companies will still offer finance if your credit score is less than perfect. It’s important to know that while an average or poor credit history might not stop you from getting finance for a vehicle, it can affect your interest rate or terms - so it is always a good idea to keep your credit score as high as possible!

At MTF Finance, we take a ‘whole picture’ view of our customers; we don’t believe that past financial slip-ups should hold back your future. We assess each application individually, and we use a credit checking system called Comprehensive Credit Reporting (CCR). CCR shows us your complete credit history - both the good and the bad - so we get a fair and balanced view.

If your credit history means we can’t currently offer you finance, our lenders might be able to help with some tips on how to improve your credit score before you reapply.

Learn more about credit reports and how we use them

Myth: “There are a lot of sharks out there”

MTF Finance, like many other responsible lenders in NZ, are committed to doing the right thing by our customers.

It is important for customers to know that while every lender has their own set of terms and conditions, we’re all required to follow the Lender Responsibility Principles set out by the Commerce Commission. The Commerce Commission is (sort of) like the Government version of Fair Go; it’s their job to keep consumers protected and informed. New Zealand has a Responsible Lending Code, which provides guidelines for lenders to follow.

A responsible lender will always keep you fully informed, provide full disclosure about your loan costs, and only offer finance when they are confident that you can afford the repayments. You should have a complete understanding of your loan before signing the paperwork and feel confident and comfortable asking questions.

As part of our commitment to being a responsible lender, MTF Finance recently launched our new Plain English credit contract, which ensures our customers can quickly and easily understand every aspect of their lending. When it comes to vehicle finance, there should be no surprises!

Myth: “Getting quotes for finance will be bad for my credit history”

This one used to be true. Back in the day, every time you obtained a quote for finance, the checks done would affect your credit score which would have an impact if you were shopping around for finance. Thankfully, those days are gone - only the enquiries for loans you actually take out are incorporated into your credit score. This means you can ‘shop around’ without affecting your credit rating.

Did you know that lending and making repayments can improve your credit score? Regularly making loan payments shows that you can be relied on to pay on time and are responsible with your money.

Myth: “If I get sick or have an accident, I’ll have no way to make my car payments”

Many vehicle finance providers now offer loan waivers to protect their customers against financial stress following an accident or illness. It’s similar to an insurance policy; if the unexpected happens, you won’t be required to make payments while you get back on your feet.

If you do not have a waiver in place and your financial situation changes, most lenders will allow you to make a hardship application. If you are genuinely unable to make your payments, the lender may be able to temporarily place your payments on hold or change your loan terms.

Another myth is that if something goes wrong, your lender will be unsupportive, or reprimand you. Remember, we are people too. We’re on your side, and the earlier you tell us you might be in trouble, the more we can do to help.

Learn more about MTF’s Customer Protections: Payment Waiver and Hardship Applications

Myth: “I won’t be able to pay off my loan early”

If you get a sudden windfall, you might want to repay your loan earlier than planned. Most lenders will allow early repayments, but there may be an additional fee to clear the balance. This doesn’t mean you can’t repay the loan early; it just means you need to weigh up the financial cost of doing so.

At MTF Finance, we will always give you the option: if you’re considering early repayment we’ll run the numbers, show you what both options look like financially, then let you choose whether to repay in full or stick with your original payment schedule.

Myth: “I’ll need a huge deposit, or an asset to put up as security”

Many Kiwi lenders, including MTF Finance, can offer vehicle finance without a deposit (although it can depend slightly on your personal circumstances, and how much you want to borrow).

When it comes to securing your loan, vehicle finance lenders will almost always use the vehicle that you’re borrowing against as security. This means that if you default on the loan, your new vehicle can be reclaimed by the lender - but you don’t have to put your house on the line to get the keys to that new truck.

Myth: “I can’t get a loan unless I’m in full-time employment”

When lenders assess your application for vehicle finance, we look at affordability, which means figuring out whether you will be able to make your repayments comfortably. That’s our primary concern; we don’t need you to be making oodles of money, we just need to know that you aren’t going to get into financial difficulty because of the loan.

This means we can often offer finance to people who are self-employed, work part-time, or are receiving a benefit, subject to affordability.