A finance agreement should not be faceless, says MTF Finance chief executive officer Chris Lamers.
For most of us, a vehicle is the second-biggest purchase we'll ever make, after a home. It's also one of the most personal. It's the car that gets the kids to school, the ute that earns the living, the caravan that finally makes the family holiday real.
Yet somewhere along the way, the finance behind these purchases has become faceless: an online form, a wait for a computer to say yes or no, and a rate that feels more like a verdict than an offer.
It doesn't need to be that way; I'd argue the best vehicle finance experience is still the one that starts with a real conversation.
The bread and butter of getting you on the road
Vehicle finance is the bread and butter of MTF, and I don't say that lightly. Whether you're buying a first runabout, a family SUV, a work ute, a boat, bike or motorhome, the principle is the same. The loan is secured against the vehicle you're buying and sized to what you can comfortably manage. That security often makes borrowing easier and can open the door to more competitive rates.
The loan itself is the simple part. The harder part is getting the right one: the right amount, the right term and the right repayments, for the right vehicle.
But a vehicle loan is a commitment measured in years, not minutes. Before signing, you should understand what you're agreeing to, what happens if life throws you a curveball such as redundancy, an illness or unexpected repair bill, and whether the numbers still work. Those questions are best answered by a person who has the time to ask them and the willingness to say "Actually, maybe not that one”, someone who has your best interests at heart, and who is the person you can call at any time.
The mortgage trap: a cheap rate can be an expensive loan
There's one mistake I see more than any other, and it's a costly one: borrowing for a car by adding it to your mortgage. I understand the appeal. The rate looks lower, there's no new loan to set up, and the weekly cost seems to barely move. But the rate isn't the whole story; the term matters too.
For example, borrow $30,000 for a car over five years at nine per cent, and you'll pay about $7400 in interest. Roll that same $30,000 into a 30-year mortgage at six per cent, and the interest comes to more than $34,000. That "cheaper" rate is costing you nearly five times as much, because you're still paying off a vehicle long after it has been sold, scrapped or replaced many times over.
You can make extra repayments to pay a mortgage-funded car off faster. Plenty of people intend to, however life has a way of getting in the way. Many vehicles lose value every year, while the debt hangs around, tying your car to your biggest asset.
A fixed-term vehicle loan is designed for the opposite: it's paid off while the car still has plenty of life left, you know exactly what you owe, and you can see the finish line from day one. Everyone's situation is different, so talk it through with your lender before you decide, and do the sums on the total cost, not just the weekly payment.
A reputation you earn one loan at a time
In 1970, a group of South Island vehicle dealers set out to give customers another option when the bank said no, keeping the lending and decisions local. Personally responsible for the loans they wrote, those dealers had every reason to get the right loan for the right customer and to look after them afterwards.
Today MTF is listed on the NZX and manages more than $1.2 billion in assets, but we're still 100 per cent New Zealand owned, backed by 56 locally owned offices and more than 100 approved dealers. Look for the yellow flag on a dealer's forecourt. The proof is in what customers tell us: a Net Promoter Score of 81.9 against an average of 16 for the industry, and arrears of just 1 per cent over 31 days. That's no coincidence.
Give local people the authority to decide, the time to talk, and customers will always be looked after.
Why those of us in finance should speak plainly
Those of us who lead this industry owe it to Kiwis to speak plainly. Finance has felt more complicated lately, with interest rates swinging, household budgets stretched and personal support harder to find. We've gone the other way, adding offices and people on the ground, because I'm convinced people want someone they can pick up the phone and talk to – you will find the mobile phone number for every one of our franchise owners on our website.
If you're thinking about your next vehicle, here's my advice, whoever you borrow from:
- Look at the total cost. Ask what you'll pay over the life of the loan, including fees.
- Ask what happens if things go wrong. Find out what protection is available, like payment waivers or mechanical breakdown insurance, before you need it.
- Borrow what you can comfortably repay. If your circumstances change, talk to your lender early. Sooner is almost always better.
- Read the fine print and ask for it in plain English. If someone can't explain it simply, that's a red flag.
- Choose a lender who'll pick up the phone. You want someone who knows your name, not just your credit score.
Fifty-six years on, I still believe what those South Island dealers believed in 1970: that lending should be about people. The best finance experiences will always be the ones where someone took the time to understand you, your plans and budget, and helped you get there with confidence. That's the kind of lender I want MTF to be, it's the kind of lender I think every Kiwi deserves.