Yes, you can use a personal loan to buy a car. You borrow a lump sum from a lender, pay the seller, and repay the lender in fixed instalments. The loan is either unsecured or secured against the car, and the secured option usually has a lower rate.
You apply to a bank, finance company or lending service. The lender checks your income, expenses and credit history. In New Zealand, lenders must do this under the Credit Contracts and Consumer Finance Act (CCCFA), which requires them to confirm you can afford the repayments without hardship. If you're approved, the money goes to you or straight to the seller, and you repay it over a fixed term.
Personal loans for car purchases come in two forms. Which one suits you depends on the car, the amount and how you feel about putting the vehicle up as security.
The lender relies on your income and credit history alone. Nothing is held as security, so the lender can't repossess the car if you fall behind. Missed payments still damage your credit file and can lead to debt collection. Lenders charge more for this risk, so unsecured rates sit higher.
The car becomes security for the loan. Because the lender can recover the vehicle, the rate is usually lower and you can often borrow more. The catch is that the lender cares about the car's age, mileage and value. An older or high-mileage vehicle can limit which lenders will take it on, how long the term is and how much they'll finance.
An auto loan is a loan built for buying a vehicle, and it is usually secured against that vehicle. Because the car backs the debt, auto loans tend to be cheaper than unsecured personal loans. United States data shows the same gap. In July 2025, the most common commercial-bank rate was 8.04% for a 60-month new-car loan, compared with 11.57% for a 24-month personal loan, according to the Federal Reserve's G.19 release.
New Zealand lenders show a similar pattern in the rates they publish:
The bottom of each range goes to the strongest applicants. Your own rate depends on your profile, so treat these figures as a guide rather than a quote. For a broader look at how lenders stack up, the best car loans in NZ 2026 guide walks through the options in detail.
Dealer finance is convenient. You choose the car and sign the finance in the same visit. The trade-off is that you see the options the dealer has arranged, and the finance discussion happens at the same time as the price negotiation. That makes it harder to tell whether you're getting a good deal on the car, the loan, or neither.
A personal loan arranged beforehand separates the two decisions. You know your budget before you walk onto the yard, and you can push on price without the finance being part of the bargaining. Dealer finance can still be competitive, so get a written quote and compare the total cost with your pre-approval.
If you'd rather not sign up for finance at the dealership, you have several options:
A matching service is most useful when your situation isn't straightforward, for example if your credit history is patchy or you've been declined somewhere else. If you're buying from an individual rather than a dealer, see how to finance a private car sale in NZ before you commit.
Assessment starts once you submit, and the time it takes depends on the lender, how complex your application is and what information they need. The most common delay is a lender asking for another document. Send complete, recent bank statements and payslips the first time. Explain anything unusual upfront, such as a gap in employment or irregular income. Answer follow-up questions the same day if you can.
Pay down credit card balances, avoid new credit applications and clear any overdue bills. Lenders read your bank statements as well as your credit score. Dishonoured direct debits and frequent overdraft use count against you.
Vehicle age affects pricing. A slightly newer car can open up secured lending at a lower rate. If you're weighing up new versus used, the guide to vehicle loans for new and used cars covers how the choice affects your borrowing options.
Some lenders price electric and hybrid vehicles differently, so ask whether a lower rate applies. If you need more than the car price, for example to install a home charger, include that amount in the loan when you apply rather than taking out a second loan later.
Compare the total amount repayable, including establishment fees and any add-on insurance. A low rate with high fees can cost more than a slightly higher rate with none.
Good financial decision-making starts with the total cost and the risk, not the weekly figure. Ask yourself whether you'd be comfortable if the car were repossessed. If you wouldn't, an unsecured loan gives you that protection at a price. If you're buying a newer car and want the lowest rate, secured lending usually makes sense. Pick the shortest term you can afford, because every extra year adds interest.
We match you with lenders suited to your circumstances, whether your credit is good or bruised. Our lender panel offers unsecured loans from $5,000 to $30,000 and secured loans up to $100,000, and we cover EV loans. Qualified advisers explain your options as you go. Eligibility depends on each lender's criteria, and approval times depend on the lender and your application, so we don't promise a set turnaround. The aim is finance that fits your situation.
The information in this article is general in nature and is provided for educational and informational purposes only. It does not constitute financial advice and should not be relied on as a substitute for personalised advice tailored to your individual circumstances.
Third-party information, rates, fees, and product details referenced in this article were current at the time of writing and are subject to change. Always confirm current details directly with the relevant company before making any decision.
Any examples, figures, or scenarios in this article are illustrative only and do not represent a credit offer or guarantee of approval. Lending criteria apply.
Nomu Finance Limited (FSP1011169) holds a Class 1 Financial Advice Provider (FAP) licence issued by the Financial Markets Authority. Personalised financial advice is only provided following a full assessment of your individual needs and circumstances by a Nomu Finance adviser.
If you are considering taking out a loan or making any financial decision, we encourage you to speak with an independent licensed financial adviser or get in touch with one of the team at Nomu, to get advice tailored to your circumstances.