Fixed vs variable car loan in NZ

When you read a car loan page, the rate usually looks like a single number. Underneath it sits a second question: does that number stay put, or can the lender move it? This page explains the difference, what NZ lenders say on their own pages (checked November 2026), and what the law requires.

We are a guide, not a lender, and we have no view on which lender will lend to you.

The short answer

If you are offered a fixed rate, you know what you will pay each period, which makes budgeting easier. If you are offered a variable rate, you have a repayment that may change, and the lender’s right to change it is spelled out in the contract.

Many borrowers do not get to choose, because the lender offers only one kind. The lenders whose car loan pages we read described fixed rates, apart from one that listed both. So the question to ask is not “which is better” but “which am I being offered, and what does the contract let the lender do?”

How the two work

Fixed. The rate is set when the loan starts and stays the same for the fixed term, which on a car loan is often the whole loan. Your repayment stays the same too, unless you change the term or make extra payments.

Variable. The rate can move during the loan. Which direction depends on the lender’s decision and the contract. The lender is allowed to change it only if the contract says so. If you want to know how the rate is calculated, look at the disclosure statement. Consumer Protection says the statement must set out the interest rate and how the interest is calculated.

What lenders publish about themselves

These are descriptions of what each says on its own site in November 2026. They are not offers to you, and your rate would be set by the lender after looking at your circumstances.

• Gem Finance says it offers a fixed or variable loan. Its page says “a fixed rate makes budgeting easier”, and adds that the rate stays the same. A footnote says loans with a variable rate are subject to change throughout the loan. It shows secured car loans at 8.99% to 28.99% a year and unsecured at 9.99% to 29.99%, with a $240 establishment fee, and says it will not charge an early repayment fee if you pay off sooner.
• ASB describes a standard fixed rate of 13.90% a year on its car loan page, says it gives certainty of your rate, and says it charges no early repayment fees on extra repayments made online.
• ANZ describes its car loan as a fixed rate loan and says interest rates are subject to change. Its fee table shows $0 for paying off the loan and for lump sum payments. The page also gives a default interest rate of your rate plus 5% a year on amounts not paid when due.

The pattern is clear enough: the lenders we checked lean towards fixed rates on car loans, and several say early repayment is free. Anything that restricts early repayment will be in the contract, so read that part.

What the law says about rate changes

The Financial Markets Authority took over regulation of the Credit Contracts and Consumer Finance Act from the Commerce Commission on 1 July 2026. Its disclosure guidance says that:

• lenders must draw your attention to key loan features, such as that the interest rate is variable or that the lender can change it on its own
• if a lender makes a change the contract allows, such as a variable rate change, it must disclose it within five working days after the change takes effect, with full details
• changes you and the lender agree on must generally be disclosed before they take effect

The FMA page we read sets no advance notice period for a lender-initiated change, so do not assume you will get warning before a higher repayment starts. If you want certainty, that is a reason to ask for a fixed rate.

Fixed vs variable at a glance

How to choose

1. Look at your budget. If a $30 weekly increase would hurt, favour fixed.
2. Look at the term. The longer the loan, the more time a variable rate has to move.
3. Look at your plans. If you expect to repay early or sell the car, the early repayment terms matter more than the rate type.
4. Look at the offers. If a lender gives you only one type, compare it with another lender’s offer on the same amount and term.
5. Look at the total. The rate type is only part of the picture. Fees and term decide the total.

A worked example

This is an illustration with round numbers, not a quote. You borrow $20,000 over five years.

• Fixed at 12%. The repayment is about $445 a month and you repay about $26,693.
• Variable, starting at 11.5%. The repayment is about $440 a month at the start. Suppose the rate stays there for two years, then moves. About $13,339 is still owing after two years.
  • If the rate then rises to 13.5%, the repayment becomes about $453 a month and you repay about $26,852 in all, roughly $159 more than the fixed loan.
  • If the rate then falls to 9.5%, the repayment becomes about $427 a month and you repay about $25,938, roughly $755 less than the fixed loan.

The variable loan starts about $5 a month cheaper. That is not much comfort if rates rise, and it does not matter much if they fall. What you pay for with a fixed rate is the removal of that uncertainty. The loan type you can live with is the one whose worst case you can afford.

Our page on what is a comparison rate shows how to fold fees in, and best car loan rates covers how to read published rates.

Step by step

1. Ask whether the rate is fixed or variable, and for how long.
2. If variable, ask how and when the lender can change it, and how you will be told.
3. Ask for the total repayable at the rate being offered.
4. Ask what early repayment costs, including lump sum payments.
5. Ask about default interest and fees if you miss a payment.
6. Read the disclosure statement and check the rate matches what you were told.
7. Compare at least two offers before you sign. See hire purchase vs car loan if the offer is hire purchase. The /check form passes your details to a broker partner, who compares lenders for you and calls you back if you want help comparing.

Checklist

• You know if the rate is fixed or variable.
• You know the length of any fixed term.
• You know how a variable rate can change and how you will be told.
• You have the total repayable.
• You know the early repayment terms.
• You have a buffer if your repayment rises.

Red flags

• A low rate with no mention of whether it is fixed.
• A “from” rate you cannot get a personal figure for.
• Early repayment charges that are not explained.
• A variable rate without a clear explanation of how it moves.
• A lender that will not give you the total repayable.
• Being rushed to sign before you have seen the disclosure statement.

If a higher repayment gets you into trouble, tell your lender early, and call MoneyTalks free on 0800 345 123.

Sources

• Gem Finance: car loans, checked November 2026
• ASB: car loan, checked November 2026
• ANZ: car loan, checked November 2026
• Financial Markets Authority: disclosure obligations
• Commerce Commission: changes to consumer credit responsibility
• Consumer Protection: getting a loan for your car
• MoneyTalks