Establishment fee

An establishment fee is a one-off charge to cover the cost of setting up your loan, such as processing the application, running checks and preparing the paperwork. It is sometimes called a loan setup fee, application fee or documentation fee, and almost every car loan in New Zealand carries one somewhere in the low hundreds of dollars.

It is usually added to the loan amount, so you pay interest on it too, or it can be paid up front. Either way it adds to your total cost of credit. A separate PPSR registration fee is common too, since the lender has to register their security interest over the car, and that is usually a smaller, fixed amount set by the register itself rather than the lender.

Fees vary between lenders, which is why the headline interest rate alone can be misleading. A loan with a low rate but a big establishment fee might cost more than one with a slightly higher rate and no fee, especially on a shorter loan term where the fee makes up a bigger share of what you pay overall. A comparison rate helps you see the real picture, and it is always worth asking a lender to show the fee in dollars, not just as a line item in the contract.

Under the CCCFA, fees must be reasonable, cover genuine costs, and be disclosed before you sign, they cannot be used as a hidden profit centre. We help you compare the full cost, not just the rate. Get your fair rate.