In New Zealand, we love our cars. Whether we’re getting our first car, a better car, or a bigger car for our growing family, for many of us this often means getting a car loan. But just because thousands of Kiwis are doing it, doesn’t mean you should just plough into something before doing the groundwork.
Don’t let the promise of a ‘nice car’ cloud your judgement. Aim to be fully informed on how vehicle finance works, and be careful you are not inheriting unwanted debt on the car you have your heart set on by checking out the finance history of that vehicle.
Even if you’re buying from a ‘mate at work’ or a ‘mate’s mate’ it always pays to double check a few facts.
By working together with the team at Pioneer Finance, we can help you to know what you are getting into. Here are a few tips to get you going:
Our advice
There are two essential parts to buying a vehicle. The first is the loan, and the second is doing your homework on any outstanding money associated with that vehicle.
When it comes to a loan…
Budget
Take a look at your regular and consistent income, and only take a loan that you can realistically afford to pay off. There’s no point buying a nice big car if you can’t afford to take it anywhere.
The fine print is important
As with any loan, there are terms and conditions attached to a vehicle loan. Shop around and read the fine print to understand what you are committing to.
For example, if you are signing a hire purchase agreement, you could be charged a significant lump of money in administration fees, particularly if you get behind in your payments.
Repossession
Don’t launch into debt that you can’t repay or it may result in your car being repossessed, which will negatively affect your credit rating, not to mention your reputation!
If the car is repossessed, this will also equate to more fees.
Get the right advice
Pioneer Finance can work with you to match a vehicle loan to your needs and help avoid the risk involved moving forward.
When it comes to the actual car…
Check if money is owing on the vehicle
Ownership papers only show you who owns the car, but they don’t specify if there is any outstanding debt on the vehicle. These are just ownership papers, nothing more and nothing less.
There are a number of online tools that allow you to check if there is money owing on a car or if it’s been stolen. It could be that the current owner has outstanding debt with a finance company or to a mechanic for unpaid repairs.
The Consumer Affairs website will help you discover if there are any outstanding debts – simply enter the registration of the vehicle.
What happens if the debt isn’t paid?
The vehicle will likely be repossessed. You can avoid this undesirable situation by doing your homework and background checks before making a purchase.
What happens if the previous owner used the vehicle as security on a loan?
If this is the case, then the lender can repossess the car, even if you are the new owner.
You can take the previous owner to the Disputes Tribunal but it is a time-consuming process, and it is very unlikely you will get your money back.
Talk to one of the team at Pioneer Finance today for a no obligation chat about securing a legitimate vehicle loan and avoiding the pitfalls.
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