What Is Vehicle Finance?
If you want a car but cannot afford the full price, vehicle finance is for you. Ensure your budget can accommodate a car loan before applying, and keep the repayment rate low by making the largest down-payment you can.
How Does Vehicle Finance Work in SA?
The lender purchases the car for you. In return, you pay the lender monthly instalments plus interest until the car loan is paid off. Most loans are secured, meaning that the car is repossessed if payment is not made. Unsecured loans with higher interest rates are sometimes made to borrowers with high credit scores.
Those with bad credit ratings can still apply for vehicle finance because the car itself is used as collateral.
The minimum lending amount is usually R30 000, and cars up to ten-years-old are considered. Just make sure the vehicle you purchase is covered by insurance should you get into an accident.
How to Apply
With many lenders it is as simple as an online application to determine whether you are eligible. At the least, ensure that you:
- Earn at least R6 000/pm
- Are At least 18 (some lenders state 21)
- Have a licence
- Can provide proof of residence
- Provide a 3-month bank statement
- Have 3 months of payslips
Some lenders require that you make a 25% down-payment in order for them to cover the remaining 75%. New or used cars can be purchased over a repayment period of 12 months – 5 years, depending on your income.
Best Vehicle Financiers in SA
- Wesbank
- FNB
- Absa
- Standard Bank
- MFC
