New Zealanders overspend on cars more than almost any other budget category. A good rule of thumb: spend no more than 20% of your annual gross income on a car purchase. Use this calculator to find your personal ceiling.
On a $70,000 salary, the 20% rule suggests a maximum car price of $14,000. On $100,000 salary: $20,000. These thresholds include paying cash or financing — if you're borrowing, the total loan amount should stay within this budget. A $20,000 car costs roughly $8,000–11,000/year to run (insurance, WoF, rego, fuel, maintenance) — about $750–900/month total cost of ownership.
Car Affordability Calculator
The 20% Car Affordability Rule
The rule: don’t spend more than 20% of your annual gross income on a car. Some financial advisers use 15% for a stricter version.
| Annual salary | 20% rule maximum | 15% rule (strict) |
|---|---|---|
| $50,000 | $10,000 | $7,500 |
| $60,000 | $12,000 | $9,000 |
| $70,000 | $14,000 | $10,500 |
| $80,000 | $16,000 | $12,000 |
| $100,000 | $20,000 | $15,000 |
| $120,000 | $24,000 | $18,000 |
| $150,000 | $30,000 | $22,500 |
Annual Car Running Costs in NZ
For a $15,000–25,000 car in NZ (approximate 2025 estimates):
| Cost | Annual estimate |
|---|---|
| Petrol / diesel | ~$2,200–3,000 (12,000km/year) |
| Maintenance & tyres | ~$800–1,200 |
| Warrant of Fitness (WoF) | ~$70–100 |
| Registration & Road User Charges | ~$400–450 |
| Comprehensive insurance | ~$600–1,200 |
| Total | ~$4,000–6,000/year |
A more expensive or older car increases these costs. An electric vehicle reduces fuel costs to ~$500–900/year but may have higher purchase price.
Car Loan Interest Rates in NZ (2025)
| Lender type | Typical rate range |
|---|---|
| Bank personal loan | 10.9–14.9% p.a. |
| Finance company (dealer) | 13.5–22% p.a. |
| Credit union | 9.9–12.9% p.a. |
| Peer-to-peer (Harmoney) | 8.99–24.99% p.a. (risk-based) |
Key point: Dealer finance is almost always more expensive than getting a pre-approved bank loan before you shop. A 4–6% rate difference on a $15,000 loan over 5 years is ~$2,000–3,500 in extra interest.