Bad credit car yards in NZ: what to check

A yard that advertises finance for bad credit is usually arranging a loan from someone else and being paid for it. That can be fine, but the price of the car and the price of the loan are separate, so check both.

By the Editorial team · Updated 9 November 2026

A bad credit car yard is, in practice, a normal dealer that is willing to arrange finance for people whose credit files are marked. Some have their own finance arm. Most use outside lenders. What they have in common is that you walk in wanting a car and walk out with two contracts to understand: the sale of the car, and the loan. This page is about how that works, how the dealer gets paid, and what to look at before you sign anything. We do not name or rate yards.

Who is actually lending

Consumer NZ explains that large car brands often have their own finance arms, and other dealers usually arrange the loan through finance companies. Either way, the lender is the one who must check the loan is affordable for you. The yard is acting as a go-between.

That matters because the person you talk to in the showroom is paid to sell a car. They are usually not a neutral adviser on which loan is best for you. Since 1 July 2026 the Financial Markets Authority (FMA) has been the regulator for consumer credit, so that is where questions about lender conduct now go.

How dealers earn on the finance

The Commerce Commission reviewed motor vehicle finance and add-ons in 2021 and published how dealers are paid. The data was for the 2020 financial year, so figures may have moved, but the structure is useful to know.

Introducer fee. Dealers often receive a fee for initiating and helping with a finance application. It was frequently charged to the customer on top of the lender’s own establishment fee. The average across lenders that gave figures was $276, the highest $1,000 and the lowest under $5.
Interest commission. Most lenders paid dealers a commission where the dealer adds a percentage to the lender’s base rate and is paid the extra. In the Commission’s example, a 20% base rate with 5% added becomes a 25% rate. The lender sets limits on how far it can go.
Add-on commission. For add-on insurance, insurers typically let dealers mark up the wholesale price by up to 100%, so the price you pay can be double what the insurer set.

The Commission found that dealers often arrange the finance and judge whether add-ons suit you, while earning commission on the sale, and called that a potential conflict. It also said lenders must make sure dealers do the duties delegated to them properly. We have not found a ban on interest commissions in force, but laws change, so ask.

What a dealer margin looks like in dollars

Using the Commission’s own example, take a $9,000 loan over three years. At a 20% base rate the repayments are about $334 a month and the interest is about $3,041. If the dealer adds 5 points and the rate becomes 25%, the repayments are about $358 a month and the interest is about $3,882. That is roughly $24 a month, or $841 over the loan, going to the dealer’s commission. These are round illustrative figures with fees left out. They are not a claim about any yard, and some lenders cap or do not pay interest commission at all. But it shows why asking “is this the lender’s base rate?” is a sensible question.

What the yard has to do

On the car side, the rules are firm.

Dealers must be registered on the Motor Vehicle Traders Register. You can search it.
For a used vehicle they must give you an accurate Consumer Information Notice, with the VIN, odometer reading, whether money is owing, the cash price and your rights. Signing it says you agree everything in it is correct. Check the “security interest” box. Consumer Protection says not to buy a car where it is ticked.
The car should be of acceptable quality, fit for purpose and as described. “As is where is” does not remove those rights when you buy from a dealer.
Dealers cannot use time limits or small print to dodge responsibility for faults covered by consumer law.

If it goes wrong, you can go to the dealer first, then to the Motor Vehicle Disputes Tribunal, which hears claims about vehicle sales under consumer law and the Fair Trading Act. You can report misleading conduct to the Commerce Commission, though it does not act for individuals. Complaints about the lending can go to the lender’s dispute resolution scheme.

A checklist for the yard

Take this on your phone.

The car

Is the trader on the Motor Vehicle Traders Register?
Does the VIN on the Consumer Information Notice match the car, in more than one place?
Is the security interest box ticked?
Has the car had an independent mechanical inspection? A warrant of fitness does not describe its mechanical condition.
What is the cash price, and is it the same on the notice and the contract?

The loan 6. Who is the lender, and is it licensed? Search the Financial Service Providers Register. 7. What is the interest rate, the term and the total of all payments? 8. What fees are there, and who gets each one? You should not pay twice for the same work. 9. Does the rate include a dealer margin or a commission? Ask directly. 10. Can I take the contract home to read before I sign? A good offer will still be there tomorrow.

The extras 11. Which add-ons are in the price, such as mechanical breakdown cover, shortfall cover or credit insurance, and what does each cost separately? 12. Is a tracking or immobiliser device being fitted, and is there a fee? Consumer NZ reports one borrower being charged $430 for a device plus a monthly fee, and has called for the devices to be banned. 13. What is the early repayment charge?

Work out your budget before you walk in

A yard sale is easiest to resist when you already know your numbers. Add up what comes in each week, take off rent, power, food, phone and other debts, then set aside a cushion for the unexpected. Whatever is left, you cannot spend all of it on the loan, because the car also costs money to run: insurance, registration, warrant of fitness, fuel and repairs. A car that looks cheap at $90 a week can be unaffordable once those are counted. Tell the salesperson your ceiling for the total weekly cost, and treat a car above it as off the table, however good the deal sounds.

Watch for these

A non-refundable cash deposit. Consumer Protection suggests avoiding cash deposits where possible, since they may not be refundable. Get any refund terms in writing.
Cash back and generous trade-ins. The price may have been raised to pay for them.
“Free extras.” Make sure they are not paid for somewhere else in the loan.
Pressure to sign today. Take the contract home.
Promises of approval. No honest lender or broker can promise approval before looking at your situation.

Line up an outside offer first

Consumer Protection’s advice is to get loan pre-approval before visiting a dealer, because dealer loans are often dearer. For someone with bad credit that may not be simple, but it is still worth getting one outside quote or a broker’s view so you have a number to compare against. If the yard’s offer is better, you have lost nothing. If not, you know. Our car loan with bad credit guide goes through lender types, and the page on no deposit finance covers the deposit question. If you are in the south of the city, there is a local guide to bad credit car finance in South Auckland.

If you want a second view before you visit a yard

Our free four-question check is not a credit application. A real person calls to talk through options, and you see the rate, fees and repayments before you sign anything. Lenders decide, and nobody can promise approval. You can read how we are paid. For free help with money worries, call MoneyTalks on 0800 345 123.

Sources

Common questions

Many are, and the law applies to all of them. Dealers must be on the Motor Vehicle Traders Register, give you an accurate Consumer Information Notice for a used car, and follow consumer law on faulty goods and misleading claims. Check the register and read the paperwork whatever the yard's reputation.

Often, yes. Consumer Protection says it is often more expensive to get a loan through a dealership. Dealers can be paid a fee for introducing the loan and a commission linked to the interest rate, so comparing the total with an outside offer is worth the time.

Within limits. The Commerce Commission's 2021 review found most lenders paid dealers an interest commission, where the dealer adds a margin to the lender's base rate and is paid the uplift. Ask whether the rate you are offered includes a dealer margin.

No. Extended warranties and add-on insurance are optional, and you keep your rights under consumer law without them. If a lender requires insurance it must show that it is suitable and affordable for you.

You can cancel a credit contract within five working days of receiving the disclosure. If you have taken the car, you still need to pay for it, so decide before you collect it.