Do you want to have a car but you don’t have enough money to pay for one in full? Applying for vehicle finance in SA may be the best option you have.
What is a Vehicle Finance?
Vehicle finance (or a car loan) is a form of debt that allows buyers to purchase a car by doing monthly instalments instead of doing a full-price payment. This makes having your own car more affordable and easier to obtain.
Before applying for vehicle finance, you should make sure your personal budget can handle it. You should also consider placing a larger down payment to lower your monthly repayments throughout the loan term.
How does Vehicle Finance in South Africa Work?
The lender purchases the car for you and pays it in full. In return, you’ll pay the lender in monthly installments, plus interest, until you complete the loan contract.
Lenders may offer either a secured or unsecured car loan. Most of them provide a secured loan wherein they will repossess the car in case you fail to fulfill your loan obligations. On the other hand, some lenders may provide unsecured loans to borrowers who have really high credit ratings. Usually, unsecured loans also have higher interest rates compared to secured ones.
With secured car loans, the lender will repossess the car if you fail to pay the loan in full. With unsecured car loans, you may get sued and face other charges in case you fail to accomplish your loan obligations.
You can still apply for a car finance in South Africa even if you have a bad credit record. This is because the lender will use the car itself as collateral and they can just get it back if you fail to pay the loan on time.
Lenders also have requirements on the minimum and maximum amount you can borrow. Usually, they’ll finance loans that amount to at least R30 000; any less than this is rejected.
Loan providers also look into the age of the car you’re buying. Some of them will only approve those who plan to buy cars that are at most 10-year old models. Some may extend it to 20-year old models, especially for those looking to buy used cars. Vintage and classic models are exceptions to the rule since their value grow as they become older.
Make sure the car you’re purchasing is covered by insurance. No one knows when an accident may happen. It’s not impossible to immediately get into one once you take the car out of the showroom. With a car insurance, you can rest assured your car is covered in case unexpected scenarios like this happens.
Applying for Vehicle Finance
Many lenders have online application forms you just need to fill and submit. From there, they can work out if your request for a car loan can be approved or not.
To be eligible to apply for a vehicle finance in South Africa, make sure you are:
- Earning at least R6 000 a month
- A South African citizen age 18 years and above (some may require that the applicant be at least 21 years of age)
- Eligible to drive and have a driver’s license
- Able to provide proof of residence (utility bills not older than 3 months are preferable)
Your creditor will also require you to submit the following documents as part of your application for an SA car loan:
- Bank statement for the past 3 months
- Payslips from your current employer for the past 3 months
Some lenders may offer loans amounting to 75% of the car’s value. With this, you can make a 25% down payment and pay the rest in monthly installments.
You can also apply for car loans in South Africa to purchase used cars. The requirements only vary a little but most of the stated requirements above stay the same.
Repayment period can last from 12 months up to 5 years, depending on your capacity to repay and the down payment you can give.
Best Auto or Vehicle Loan Providers in South Africa
Here’s a list of the best car loan providers in South Africa.
Frequently Asked Questions
Can I still get Vehicle Finance if I’m blacklisted?
This can depend on the vehicle finance lender, it is always worth checking with them first to see if they will provide you with a financing plan with your current financial position. If they do not accept your position, there are always other ways to get a car if you’re blacklisted.