First Car Loans in NZ: Finance for Under-25s and Restricted Licence Holders
Buying your first car is a big step, and for most young Kiwis it means a first car loan too. If you are under 25, on a restricted licence or have never borrowed before, you might be wondering whether a lender will even look at you.
The good news is that age and licence type are rarely what decides a car loan. This guide explains what lenders actually look at, how to build your chances of approval, what the restricted licence rules mean for you, and the licence changes coming in January 2027.
The Short Answer
Yes, you can get a car loan if you are under 25 or on a restricted licence. Most NZ lenders need you to be at least 18, and then the main question is whether the repayments are affordable from your income after your regular spending.
A short credit history or a new job can make approval harder, but it is not a deal breaker. A deposit, a steady income, clean bank statements and a sensibly priced first car all help, and a guarantor is an option if you need extra support.
What Lenders Look At
Age 18 or Over
Most lenders need you to be at least 18 to sign a car loan in your own name.
Regular Income
Wages, salary or other steady income that can cover the repayments with room to spare.
Bank Statements
Recent statements showing your income and everyday spending, so the lender can check affordability.
Credit History
Your record of paying bills and credit on time. Having little history is common at your age.
Deposit
Not always needed, but a deposit lowers what you borrow and shows you can save.
ID and Address
Photo ID such as your driver licence or passport, plus a recent document showing your address.
Can You Get Car Finance on a Restricted Licence?
Yes, many lenders will consider you on a restricted licence, and some will consider a learner licence too. In most cases your driver licence is used as photo ID, and a passport can be used instead. What matters far more is your income, spending and credit history.
Every lender has its own policy, so being declined by one does not mean you will be declined by all. That is one advantage of applying through a dealer who works with several lenders. Our guide to what affects car loan approval covers the details, and our list of documents needed for car finance shows what to have ready.
Restricted Licence Rules to Know
Before you buy, make sure the car suits how you are allowed to drive. On a restricted car licence, unless a supervisor is sitting in the front passenger seat:
- No driving between 10pm and 5am.
- No passengers, except a few exempt people such as your spouse or partner, a child you live with and care for, your parent or guardian, or someone you are the primary caregiver for.
- Automatic only if you sat your test in an automatic.
If you are under 20, you have a zero alcohol limit. Breaking your licence conditions can mean a fine and 35 demerit points. You can read the full conditions on the NZTA Drive website.
Licence Changes Coming in January 2027
The Government has confirmed changes to the graduated driver licensing system for car licences. Most take effect from 25 January 2027, and the biggest one for young drivers is that you will no longer need a second practical test to move from your restricted to your full licence.
| Now (until 24 January 2027) | From 25 January 2027 | |
|---|---|---|
| Learner period (under 25) | At least 6 months | 12 months, or 6 months with logged practice hours or an approved course |
| Restricted period (under 25) | 18 months, or 12 months with an approved course | 12 months |
| Restricted period (25 and over) | 6 months, or 3 months with an approved course | 6 months |
| Getting your full licence | Pass a second practical test | No second practical test for a car licence |
| Demerits while restricted | Count towards suspension | Each demerit adds 6 months to the restricted period |
Changes confirmed by the Government in February 2026 for car (class 1) licences, taking effect from 25 January 2027. Demerits received from 7 May 2026 can extend a restricted period from that date. Check the latest rules with NZTA before you plan around them.
The zero alcohol limit is also set to extend to all learner and restricted drivers, regardless of age, but that needs a law change and no date has been set yet. The details are in the Government announcement.
How to Build Your Credit History
Many young buyers have a thin credit file simply because they have not borrowed before. That is normal, and it is not the same as a bad credit history. What lenders do not want to see is missed payments or defaults.
- Pay everything on time, including phone plans, power bills and any existing credit.
- Avoid lots of credit applications at once, as each one can show on your credit file.
- Check your credit report for free with Centrix, Equifax and Experian, and get any mistakes fixed before you apply. The govt.nz guide explains how.
- Keep your bank account tidy for a few months before applying, as lenders read your recent statements.
Our guide to what credit score you need for car finance explains more.
Using a Guarantor
If your income is low or your credit history is very short, a parent or other family member may offer to be your guarantor. A guarantor promises to cover the loan if you cannot, so the lender can recover the amount owed, plus fees and interest, from them.
That is a serious commitment. The lender must check that the guarantor can afford the repayments too, explain what they are signing up for, and give them copies of the key documents. Guarantors should read the agreement carefully and are encouraged to get independent advice first. The Consumer Protection guide to guarantors is a good place to start.
What a First Car Loan Might Cost
Most first cars are sensibly priced, small hatchbacks. As a guide, borrowing $12,000 over five years works out at roughly $64 to $75 a week at our lenders' rates of 10.69% to 17.95% p.a., including the $800 establishment fee. At our calculator's default rate of 11.95%, it is about $65 a week.
Your rate depends on your circumstances, and our guide to car finance interest rates explains what affects it. Try your own numbers on our car finance calculator, or see what your car repayments will be at different loan amounts.
A deposit helps but is not always required, as no deposit car finance is available for eligible applicants.
Budget for Insurance Too
Insurance is often the cost that surprises young drivers most. Drivers under 25 usually pay more for cover, often through a higher excess, and insurers generally require anyone under 25 or on a learner or restricted licence to be named on the policy. Not naming a young driver can mean a higher excess or a declined claim.
Get an insurance quote on the exact car before you commit, as two similar cars can cost very different amounts to insure. You can get a quick quote through our car insurance page, and our guide to the real cost of owning a used car covers fuel, servicing, WoF and rego.
Your First Car Loan in Three Steps
Check Your Budget
Work out what you can afford each week, including insurance, fuel and running costs.
Get Your Documents
Have your ID, proof of address and recent bank statements ready to go.
Get Approved First
Apply online before you shop, so you know your budget when you choose a car.
Tips for Young Buyers
- Choose a sensible first car. A small, safe, economical car is cheaper to buy, insure and run. See our guide to the best first cars for new drivers and our safest used cars.
- Do not stretch your budget. Leave room for the unexpected, like a flat tyre or a rise in fuel prices.
- Be honest on your application. Lenders check your bank statements, and accurate information leads to faster decisions.
- Buy from a registered dealer. You get the protection of the Consumer Guarantees Act, which does not apply to private sales.
First Car Finance Specialists in Hamilton
We help plenty of young drivers into their first car, and we work with a range of lenders, so we can find one that suits your situation. Tell us what you can afford each week and we will show you cars that fit.
Visit us at 20 Arthur Porter Drive in Hamilton, open seven days, or start online: apply for finance and browse our current stock. Got more questions? Our car finance FAQs cover the basics. Not local? We offer delivery anywhere in New Zealand.
Frequently Asked Questions
- Yes. Most NZ lenders need you to be at least 18. Your age is not the main factor; lenders mainly want to see that the repayments are affordable from your income after your regular spending.
- Yes, many lenders will consider you on a restricted or learner licence. Your licence is mainly used as photo ID, and a passport can be used instead. Each lender has its own policy, so it pays to apply through a dealer who works with several.
- Not always. No deposit car finance is available for eligible applicants. A deposit is still helpful because it lowers the amount you borrow, reduces your repayments and can improve your chance of approval.
- Not necessarily. Many young buyers are approved on their own income. A guarantor can help if you have little credit history or a lower income, but the guarantor becomes legally responsible for the loan if you stop paying.
- Pay every bill, phone plan and credit account on time, avoid applying for lots of credit at once, and check your credit report for free with Centrix, Equifax and Experian so you can fix any errors before you apply.
- As a guide, borrowing $12,000 over five years works out at roughly $64 to $75 a week at rates from 10.69% to 17.95% p.a., including an $800 establishment fee. At our calculator's default rate of 11.95%, it is about $65 a week.
- You cannot drive between 10pm and 5am, or carry passengers, unless a supervisor is in the front seat, apart from a few exempt passengers such as your partner or a child you care for. Drivers under 20 have a zero alcohol limit.
- Yes. From 25 January 2027, the restricted period for car licences is 12 months for under-25s and 6 months for drivers 25 and over, and the second practical test for a full licence is removed. Demerits on a restricted licence add six months.
- Usually, yes. Drivers under 25 often pay higher premiums or excesses, and insurers generally require drivers under 25 or on a learner or restricted licence to be named on the policy. Get an insurance quote before you choose a car.
