No finance cars options are part of the car ownership solutions available to South Africans. It takes away the hassle involved when finding financing for your car purchase.
Nonetheless, most South African don’t own cars because of difficulties in accessing capital. When you finance a car purchase, you are required to make a down payment and then take out an auto loan. The loan allows you to use the car, and pay it off over a stipulated period. Typically, you will make monthly payments, with interest, until the car is paid off.
Financing a car can be challenging for South Africans who have poor credit scores or who are under debt review.
What is Considered a Bad Credit Score?
A credit score refers to a numerical representation of a person’s creditworthiness. It is mainly employed by financial institutions to evaluate the credit risk of a potential borrower. A credit score ranges between 300 to 850, the higher the figure, the lower your risk. Any figure below 580 is considered poor credit. There are several factors that contribute to your credit score. They include:
- Credit utilization,
- Payment history,
- Duration of credit history, among others.
A poor credit score can prevent a potential buyer from getting a loan to finance their car. Since it might be challenging to get loans or credit lines approval, your best option for a No Finance Car option, like rent to buy.
What Does it Mean to be Under Debt Review?
Being under debt review means that an individual is committed to repaying their debt in full, after renegotiating new terms with the creditors. This can mean:
- A longer repayment period,
- Lower monthly repayments, or
- A combination of both.
Even so, you will still be required to repay your loan in full and on time
With no interest and no financing, No Finance Car option is the easiest way to own a car in South Africa. Thousands of South Africans who have issues getting finance have resorted to No Finance Cars. Whether you are blacklisted, or simply enjoy the flexibility of getting a car without the trouble of loan repayment or ridiculous interests, No Finance Cars has you covered.
What are Your No Finance Cars Options?
No Finance Cars have several options out there for you to choose from, however, rent to buy is the least stressful and most available option to own a car if you have financial constraints.
Rent-to-buy, also referred to as rent-to-own, is a type of agreement that allows you to rent a car at a fixed monthly price. Usually, they come with a lower deposit and you can choose your ideal payment plan. This may help to improve your credit score and get you out of debt.
This option is great for individuals who are looking to buy a car but do not have the full purchasing amount upfront. It enables you to rent the car for an agreed-upon period, during which you will make monthly payments towards the purchase price. When the rental period ends, you will have the option of either buying the car or returning it.
Typically, rent-to-own agreements include basic repair and maintenance coverage, this gives you the luxury of not worrying about unexpected expenses of owning a car.
The ability to build equity in the car and the flexibility to return the car when or if your financial situation improves is also an added advantage.
Rent to Buy Summary
- No hidden costs. Rentals are fixed for the entire period of 54 months
- Free of interest
- Free roadside assistance included on all cars
- Free of mileage restrictions
- Free mechanical breakdown on all passenger cars
- Free theft and accident protection on every car
- Free option to upgrade your car every 18 months
- Buy your car at the end of your rental period
- Terminate the contract at any point
- Low minimum approval criteria
Buying a New Car
This option comes with both advantages and disadvantages. The advantage of buying a car from a dealer is that they offer warranty coverage as well as other after-sales services. The downside to it is that it can be more costly than buying from a private seller. The prices at the dealers also tend to be inflexible, making it difficult to negotiate a decent deal. Another downside is that you can be blacklisted and put under debt review if you default, further damaging your credit score.
Another option for No Finance Cars is leasing. Leasing is a type of financing that enables individuals or businesses to use an asset for a stipulated period, after which you can purchase or return the asset outright. Even though leasing can be a flexible and convenient way to acquire a car, there are a few disadvantages to leasing that you may need to be aware of before you sign your lease agreement.
Cons of Leasing
First, if you have been declared insolvent or are under debt review, you may be unable to get leasing. If you are blacklisted, you can get leasing, but will probably have to pay a higher deposit and monthly rate.
To add to that, there are several cases of fraud surrounding leasing and loans in South Africa. This is because many leasing and rental companies use your poor credit score or “under debt review” difficulties to exploit you.
Finally, if you damage the leased car or default on your payments for whatever reason, you may be held liable. You may be required to cater for the cost of replacements or repairs in entirety. You should consider all these disadvantages before you get a lease agreement.
If you do not want the hassles of owning a car or are looking for a short-term no finance car solution, renting a car may be your ideal option.
Things to Consider When Renting a Car
You need a good credit score as they might carry out a credit check before they approve your application. Individuals who are under debt review or blacklisted might experience difficulties finding a rental car.
Consider the length of your contract. Typically, the minimum contract length is about 3 months. Meaning, renting a car may not be suitable for you if you only need a car for a shorter period.
You may need to read and understand the fine print before signing your contract. Hidden charges and fees are common in the car rental industry.
How Do No Finance Cars Options Work?
No Finance Car option makes acquiring a decent pre-owned car as easy as possible. At the end of the rental duration, you are allowed to:
- Return the car,
- Purchase it, or
- Choose to upgrade it to a newer model, so long as your account has been well maintained.
No Finance Cars Application Criteria
- Have a valid, endorsed South African driver’s license.
- Earn a gross salary of at least R12,000, before deductions
- Have the ability to raise a minimum deposit of about R12,500, depending on your car of choice
When Should you Consider No Finance Cars Options
- If you are blacklisted
- You do not want to take a loan from your local bank
- If you are salaried or self-employed
- You are struggling financially
- If you would like to drive a different car every 18 months
- You have a poor credit profile or no credit history
- If you qualify for conventional finance but would rather opt for the flexibility of No Finance Cars program
Why No Finance Car Options
- Your credit profile will not affect your ability to acquire the latest model, quality tested, and approved car.
- There is no middle-man or agent.
- You have the flexibility to decide whether to keep the car after 54 months or not.
- The availability of an unlimited supply of cars for you to choose from.
- No finance cars have fixed repayment prices over the term, unlike other programs.
- You can terminate the contract at any time.
- No finance cars have no mileage restrictions.
- You have the option to downgrade or upgrade your car every 18 months.
- Rentals are paid out in arrears so that you do not have to pay huge upfront fees. Just the required deposit amount.
No Finance Car option offers you an opportunity to buy a car of your liking. You can buy entry-level, workhorse, to luxury cars. Everyone can get a car that is best suited for them. For instance, you can buy Suzuki, Renault, Nissan, Polo, Datsun, Toyota, Ford, and Hyundai, among others. A car for every person.
No Finance Car option offers an alternative way for South Africans to own cars. You do not need a perfect credit history or bank loan to acquire the car of your dreams. If you qualify, you can rent the quality-tested and approved car of your choice, and once the rental period is over, you stand a chance to be a car owner.