Glossary
Loan language, translated.
Every term a lender, a contract, or a fine-print footnote will throw at you, defined in a sentence or two, in plain English, for how car loans actually work in New Zealand.
A
Add-on insurance
Insurance products sold alongside a car loan (payment protection, GAP, mechanical breakdown cover), often financed into the loan itself, so they accrue interest too.
Amortisation
The way a loan is paid off over time through regular payments that cover both interest and principal, until the balance reaches zero.
B
Balloon payment
A large lump sum due at the end of some car loans. It keeps regular payments lower during the term but leaves a big amount to clear at the finish.
Break fee / early repayment fee
A fee some lenders charge when you pay a loan off before the end of its term, including when a refinance pays it off. Many NZ loans charge little or nothing.
C
CCCFA
The Credit Contracts and Consumer Finance Act: the law governing consumer lending in NZ. It sets the rules lenders must follow on disclosure, fees and responsible lending.
Comprehensive credit reporting
The NZ credit reporting system that records positive history (accounts held and repayments made on time), not just defaults and missed payments.
Credit enquiry (soft vs hard)
A check on your credit file. Soft enquiries are invisible to other lenders and don't affect your score; hard enquiries are recorded on your file and can.
Credit file
The record credit bureaus keep about your borrowing: accounts, repayment history, enquiries and any defaults. Lenders read it when they assess you.
Credit score
A number summarising your credit file: how reliably you've handled credit so far. Higher scores generally open access to more lenders and better pricing.
D
Dealer finance
A car loan arranged at the dealership as part of buying the car. Convenient, but the loan is chosen from the dealer's panel, not the whole market.
Debt consolidation
Rolling several debts into one loan with a single repayment. It can simplify your finances, but the total cost depends on the pricing and term of the new loan.
Default
A formally recorded failure to pay a debt, listed on your credit file. Defaults make lending harder to get, but they age off the file over time.
L
Lender panel
The group of lenders a referral service works with. One application to the panel means multiple lenders can be matched against your file, instead of you applying to each separately.
Loan term
How long the loan runs: the period over which you agree to repay it. Car loans in NZ commonly run from one to five years or more.
P
Payout figure
The exact amount needed to close your loan today: the outstanding balance, plus any break fee, minus any rebates owed to you. Your lender must provide it on request.
PPSR
The Personal Property Securities Register: NZ's public register of security interests over personal property, including cars with money owing on them.
Principal (balance)
The amount you actually owe on the loan, before interest and fees are added. Your balance is the principal still outstanding at any point in time.
R
Referral service
A service that connects borrowers with lenders rather than lending itself. Leverage is a free referral service: lenders pay a referral fee on settled loans, and that fee doesn't change your pricing.
Refinancing
Replacing your current loan with a new one, usually from a different lender, that pays the old loan off in full. Same car, new loan behind it.
Repayment frequency
How often you make loan payments: weekly, fortnightly or monthly. Most NZ lenders let you match it to your pay cycle.
Responsible lending / affordability assessment
A lender's legal obligation to check that a loan is suitable and affordable for you before approving it, using your income, outgoings and circumstances.
S
Secured loan
A loan backed by an asset: for car loans, the car itself. The lender can repossess the asset if the loan isn't repaid, and pricing is usually lower than unsecured lending in return.
Security interest
A lender's registered legal claim over an asset, like your car, that secures a loan. It's released when the loan is repaid in full.
Settlement
The moment a loan completes: money moves, the old loan is paid out, and the new contract takes effect. In a refinance, settlement is when the switch actually happens.
T
Top-up loan
Extra borrowing added to an existing loan, so you owe more under the same contract. The opposite of refinancing, which replaces the loan entirely.
Total cost of credit
Everything the loan costs you over its life: all interest, plus all fees, on top of the amount borrowed. The single best number for comparing loans.
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