Car finance when unemployed in NZ
If you have no job and no benefit, a car loan is unlikely, because a lender has to check you can repay from income you can show. That is the honest answer, and it does not leave you stuck. Work and Income has help aimed at getting you to work, and a job offer changes the picture quickly.
The plain answer
Car finance needs income. Under the Credit Contracts and Consumer Finance Act (see CCCFA), a lender has to make reasonable inquiries and be satisfied you can repay without suffering substantial hardship. If you have no wage, no benefit and no one else’s income in the picture, the lender has no way to meet that test, so you will likely be declined.
We would rather tell you that now than have you apply to five lenders and collect five marks on your credit file. This page is about what to do in that position, and when a loan becomes realistic.
Fair Finance is a referral service, not a lender. Nobody can promise approval, and we do not want you borrowing for a car you cannot afford to run.
Work out which situation you are in
“Unemployed” covers different circumstances, and they lead to different answers.
- You have a benefit. Then you do have income, and our page on car finance on a benefit or WINZ is the better starting point. If you are not on a benefit but think you might be entitled to one, Work and Income can tell you.
- You have savings. A cash purchase of a cheap, safe car may be possible without any loan at all.
- You have a job offer but have not started. This is the most useful case, covered below.
- You are looking, with no money coming in. A loan is unlikely at this stage. Focus on what gets you into work.
- You are supported by a partner. A partner’s income may allow a joint application. Both of you are then liable for the debt.
Why a car matters, and why it is not the first step
If the car is what gets you to a job, the question is whether it is really the only way. Sometimes it is, such as shift work with no bus or a rural job. Other times a licence, a bus pass or a lift for a few weeks will do. Work out the cheapest way to get to work, then consider whether borrowing is the right one.
Work and Income pages we checked set out help aimed at this. They do not buy a car, but they can cover parts of the problem.
What Work and Income can help with
Transport to Work
Its Transport to Work page lists three kinds of help:
- Driver licences. Providers around the country can help with studying for the learner licence test, driving lessons for the restricted or full licence test, test fees and use of a vehicle for the test.
- Public transport. Community Services Card holders can get a discount on single-trip adult fares.
- Car repairs. Work and Income may help with some repairs if your income and assets are under set limits, and the help has to be repaid.
Transition to Work Grant
This is for the costs of finding or starting a job. It can cover things like interview clothes, travel, tools or work clothing, and living expenses between your last benefit payment and your first pay. The page says you do not need a job offer, you must be looking for paid work of 30 hours a week or more (20 for sole parents), and you do not repay it. The total is up to $1,500 in 52 weeks. Your income, your partner’s income and your cash assets are taken into account.
Relocate for Work Support
If a job means moving, this may help with travel and moving costs.
Temporary Additional Support
This is a weekly payment for essential costs you cannot meet, paid for up to 13 weeks and then re-applied for. It does not require you to be on a benefit, and the page lists employment-related costs, including vehicle costs, among what it can cover.
None of these is a promise, and each has its own tests. The quickest route is to ring 0800 559 009, say you are looking for work and need transport, and ask what applies to you.
If you have a job offer
This is where a loan can come back into view, because the lender can now see income on its way.
- Get the offer in writing. A letter with your start date, hours and rate of pay.
- Ask your employer about timing. Some people start with a trial period or a short contract. Tell any lender exactly what you have.
- Expect to show payslips. Many lenders prefer to see actual pay in your bank account, not just a promise of it, so a few weeks of waiting is common.
- Build a deposit from the first pay. Even a small one reduces the loan. See no deposit car finance on a benefit for how much the difference can be.
- Keep the borrowing small. A new job is not secure in the first months. Choose the cheapest reliable car.
A worked example (illustrative only)
These figures are round, made-up numbers and not a quote.
Say you accept a job paying $620 a week after tax. Rent, food, power and phone come to $430, leaving $190. A car for $5,000 with a $500 deposit means borrowing $4,500. At an example rate of 24.95% over 36 months, repayments are roughly $179 a month, about $41 a week. Fuel, rego and insurance might add another $50. That would leave about $99 a week, which is workable.
Now compare the same person before they start the job. Income is $0, so there is no repayment to test. The same car and the same loan are out of reach until the pay arrives. Use the repayment calculator for your own figures.
Things not to do
- Do not apply to many lenders at once. Each hard check is recorded on your file.
- Do not use a lender who skips the income check. The law says lenders must check. A lender who does not is a red flag.
- Do not borrow against a promise of work. If the job falls through, the debt remains.
- Do not sign for a relative’s car loan without understanding it. You would be liable for the whole debt.
- Do not pay money upfront for finance. Consumer Protection says to check a lender is registered on the Financial Service Providers Register before you deal with them.
A short checklist
- I know which situation I am in (benefit, savings, job offer, partner, none)
- I have rung Work and Income on 0800 559 009 about transport help
- I have a cheaper way to get to work worked out as well
- I have a job offer letter or payslips, if I have started
- I have a weekly budget showing what I can repay
- I have booked a free budgeting call if money is tight (MoneyTalks, 0800 345 123)
How Fair Finance helps
If you have income, we take your details once and run a single soft credit check, then refer you to lenders on our panel that may suit you. If you do not have income yet, we will say so, and suggest the steps above instead. Start with the eligibility check or see how it works.
General information only, not financial advice. Grant limits and eligibility change, so check the official pages below.
Sources
Common questions
Can I get a car loan in NZ if I am unemployed?
It is unlikely if you have no income at all. A lender must check you can repay without substantial hardship, and with nothing coming in there is nothing to test. Income from a benefit, a job or a partner can change that, but lenders decide case by case and nobody can promise approval.
Does a job offer help me get car finance?
It can help the conversation, but a lender assesses income you can show. Some will want to see your first payslips, so be ready to wait a few weeks. A signed offer letter with your hours and pay is still worth having to hand.
Can Work and Income help me with transport to a job?
Yes, in some cases. Its Transport to Work page lists help with getting a driver licence, public transport fares through the Community Services Card discount, and some car repairs. A Transition to Work Grant can cover costs of finding or starting a job, up to $1,500 in 52 weeks, and it does not have to be repaid.
Do I need to be on a benefit to get that help?
Not always. The Transition to Work Grant lists several routes in, including registering as a jobseeker or having a short gap between jobs. Eligibility depends on your income, your partner's income and cash assets, so ring 0800 559 009 and ask.
Should I ask a family member to take the loan for me?
Be careful. If a relative takes a loan for a car you drive, they owe the debt, and any missed payment lands on their credit file. If you go down this route, agree the repayments in writing and read our guide on joint and co-signed finance first.
What about lenders that say they lend to anyone?
Treat that as a warning. Every lender must check affordability, and very high-cost lenders are capped but still expensive. If a lender does not ask about your income, ask why.
See your repayments, then get a fair rate.
One application, one soft credit check, no obligation. We match you to the lender most likely to give you a fair go.