You do not always need a deposit to get car finance in New Zealand. No-deposit finance can be available to approved borrowers, but contributing some of your own money can reduce the amount you need to borrow. That can mean smaller repayments and less interest to pay. This guide explains how car loan deposits work, what difference different deposit amounts can make, and what to consider before using your savings.
Key takeaways
- ✓A deposit is not always required for car finance in New Zealand.
- ✓No-deposit finance can allow approved borrowers to finance the full vehicle purchase price.
- ✓A larger deposit reduces the amount you need to borrow.
- ✓Borrowing less can reduce your regular repayments and total interest cost.
- ✓A trade-in can also reduce the amount that needs to be financed.
- ✓Do not use so much of your savings for a deposit that you leave yourself without a useful financial buffer.
Do you need a deposit for a car loan in NZ?
Not necessarily. Whether a deposit is required depends on the lender, the finance product and your application. Some approved borrowers can finance the full purchase price of a vehicle without paying an upfront deposit.
There is no universal minimum deposit for every NZ car loan. No-deposit finance can be available, while other applications or lenders may require or prefer a contribution.
What does a car loan deposit actually do?
A deposit reduces the amount of the vehicle purchase that needs to be financed. If you buy a $30,000 car and contribute $5,000 yourself, the starting amount you need to finance is $25,000 rather than $30,000, before allowing for any fees or other costs included in the loan.
How different deposits change the amount you borrow
The simplest effect of a deposit is a smaller loan. The examples below use a $30,000 vehicle price and show how different upfront contributions change the amount that needs to be financed.
| Vehicle price | Your deposit | Amount to finance |
|---|---|---|
| $30,000 | $0 | $30,000 |
| $30,000 | $2,000 | $28,000 |
| $30,000 | $5,000 | $25,000 |
| $30,000 | $7,500 | $22,500 |
| $30,000 | $10,000 | $20,000 |
How much can a deposit reduce your repayments?
Because a deposit reduces the amount financed, it can also reduce the repayment. The examples below use a five-year term and an illustrative interest rate of 9.95% p.a. They exclude fees and are not finance quotes.
Using a $5,000 deposit on a $30,000 car reduces the amount financed by $5,000. At the same example rate and term, that also reduces the indicative weekly repayment.
| Deposit on a $30k car | Amount financed | Example term | Approx. weekly repayment |
|---|---|---|---|
| $0 | $30,000 | 5 years | $147 |
| $2,000 | $28,000 | 5 years | $137 |
| $5,000 | $25,000 | 5 years | $122 |
| $7,500 | $22,500 | 5 years | $110 |
| $10,000 | $20,000 | 5 years | $98 |
Does a bigger deposit mean less interest?
Generally, borrowing less means there is a smaller balance on which interest can accrue. If the rate and term remain the same, a borrower financing $20,000 would normally pay less interest than someone financing $30,000. The exact saving depends on the loan's rate, term, fees and repayment structure.
What is a good deposit for a car?
There is no percentage that is automatically right for everyone. A useful deposit is one that meaningfully reduces the amount you need to borrow without leaving you short of money for other important expenses.
Instead of aiming for a universal percentage, compare what your repayment and total borrowing cost look like with several deposit amounts.
Is a 10% car deposit enough?
A 10% deposit can make a noticeable difference because it reduces the amount financed by one tenth of the purchase price. For example, 10% of a $30,000 vehicle is $3,000, reducing the amount to finance to $27,000 before fees. Whether that is enough for a particular finance application depends on the lender and your circumstances.
What about a 20% car deposit?
A 20% deposit reduces the amount financed further. On a $30,000 car, 20% is $6,000, leaving $24,000 to finance before any fees or other financed costs. The benefit is a smaller loan, but there is no rule that every borrower needs to put down 20%.
Can you get a car loan with no deposit?
Yes, no-deposit car finance can be available to approved borrowers. In this situation, the borrower may finance the full purchase price rather than contributing cash upfront. Approval and the terms available still depend on the lender and application.
No-deposit does not mean no cost. You are financing more of the vehicle price, so repayments and total interest can be higher than they would be if you contributed a deposit.
What are the advantages of no-deposit car finance?
The main advantage is that you do not need to use a large amount of cash upfront. That can allow you to keep savings available for emergencies, insurance, registration, maintenance or other expenses associated with owning the vehicle.
What are the disadvantages of no-deposit finance?
Financing the full purchase price means borrowing more. All else being equal, a larger loan generally produces larger repayments and more interest than a smaller loan.
| No-deposit advantage | Trade-off |
|---|---|
| Keep more cash available | You need to finance more of the vehicle price |
| No large upfront contribution | Regular repayments can be higher |
| Can purchase without first saving a deposit | More interest can be paid because more is borrowed |
Can your trade-in be used instead of a cash deposit?
A trade-in can effectively reduce the amount you need to finance when its value is applied toward the purchase. For example, if you buy a $30,000 vehicle and receive $8,000 for your existing car, you may only need to fund the remaining $22,000 before fees and any other adjustments.
What if you still owe money on your trade-in?
If finance is still owing on your existing vehicle, the situation is more complicated because the outstanding debt needs to be accounted for. The trade-in price alone does not tell you how much equity you have in the car. Find out the settlement amount on the existing finance and compare it with the vehicle's trade-in value before assuming the full trade-in amount can be used toward the next car.
Should you use all your savings as a car deposit?
A larger deposit can reduce borrowing, but using every dollar of your savings may leave you without a buffer for unexpected costs. Cars also come with insurance, fuel or charging, servicing, WOF, registration, tyres and repairs.
Reducing your loan is useful, but keeping enough accessible savings for unexpected expenses can also be valuable.
A finance deposit is different from paying a dealer to hold a car
The word deposit can describe two different things. A contribution toward the vehicle purchase reduces the amount you need to finance. A cash deposit paid to a seller to secure a purchase can instead form part of the sales agreement and may be difficult to recover if you later change your mind. Make sure you understand what any payment is for before paying it.
Deposit vs keeping money in savings
There is a trade-off between borrowing less and keeping cash available. Putting more money into the vehicle reduces the amount financed, while keeping that money in savings preserves your financial buffer. The right balance depends on your own finances and the borrowing costs available to you.
How to compare different deposit amounts
Before deciding how much to contribute, compare several scenarios. Looking at the resulting loan amount, repayment and total borrowing cost can make the decision much clearer.
| Check | Question to ask |
|---|---|
| Amount financed | How much will I need to borrow after the deposit? |
| Repayment | How much does the deposit reduce each repayment? |
| Total interest | How much interest could I avoid by borrowing less? |
| Savings remaining | Will I still have a useful financial buffer? |
| Vehicle costs | Have I allowed for insurance, servicing and other ownership costs? |
Compare car finance with and without a deposit
If you have money available for a deposit, compare what the finance looks like both with and without that contribution. EveryLoan refers visitors to Simplify Finance, where applications, lender matching, credit decisions and funding are handled by Simplify Finance and its lender partners.
EveryLoan is not a lender. Whether a deposit is required, and the finance available with or without one, depends on the lender assessment and your circumstances.
Frequently asked questions
There is no universal minimum deposit for every car loan. Some approved borrowers can obtain no-deposit finance, while other lenders or applications may require or prefer a contribution.
Yes, no-deposit finance can be available to approved borrowers. Approval and the rate, fees and terms offered depend on the lender and your application.
A bigger deposit reduces the amount you need to borrow, which can reduce repayments and interest costs. However, consider how much savings you want to keep available rather than automatically contributing as much as possible.
Generally, yes. If the rate and term stay the same, borrowing less because of a deposit results in a smaller scheduled repayment.
The value of a trade-in can be applied toward the vehicle purchase and reduce the amount that needs to be financed. If money is still owing on the trade-in, its settlement amount also needs to be considered.
There is no universal 10% requirement. A 10% deposit reduces the amount you need to finance, but whether a lender requires a particular contribution depends on the application and lender.
A $5,000 deposit reduces the amount you need to finance by $5,000. Whether that is sensible depends on the vehicle price, the finance available and how much savings you want to retain.
A contribution used toward the purchase and a cash deposit paid to a dealer to secure a sale are not necessarily the same thing. Consumer Protection warns that cash deposits paid to car dealers can be non-refundable if you later decide not to proceed, so check the sales agreement before paying.