Affordable vehicle finance is for you if you are looking to buy a car and don’t have a big bag of cash lying around. Once you have found your dream car, whether new or second hand, you will need to know the various options available to you. And move swiftly in order to avoid losing those dream wheels.
Affordable vehicle finance is available for
- Cars
- Motorcycles
- Bakkies
- Scooters
- Trucks
- Fleet Vehicles
- Trailers
The National Credit Act sets out standard conditions for a vehicle instalment sale agreement.
Essentially, provision of credit to purchase a vehicle is on the condition that the borrower pays back the capital plus interest.
Monthly Instalments and Interest Rates
Your monthly instalments for car finance will be according to the purchase price of the car.
This, beyond sticking to a budget, is pretty much beyond your control. What is slightly more in your control is the interest rate you get. And the “extras” such as warranties, that you add to the price of the car.
The way in which you can “influence” your interest rate on car loans offered by banks in South Africa, is by having an impeccable credit record.
If you always pay your debts on time. And the full amounts. This will have a positive influence on the interest rate for your vehicle finance.
Affordable Vehicle Finance Interest Rates in South Africa
What is not in your control however, is the current REPO rate.
This is determined by the South African Reserve Bank, and will be the starting point for your interest rate.
If you get “prime”, this means that you get the current lending rate. Getting “prime plus” is not ideal on vehicle finance. However “prime minus” is great.
Because it means you are seen as a stable and valuable client of the vehicle financer lender.
Various vehicle sellers will link to a particular vehicle finance institution. And while you are able to approach different vehicle financiers, it is usually easier to go with the financier in these cases.
Because of relationships between vehicle sellers and financiers, you would probably end up getting a better interest rate if you went with the recommended lender.
It is also usually preferential to approach the bank you bank with to finance your vehicle. Because you have an existing relationship with them. So they are likely to look more favorably on your case.
It is also handy to do this from a convenience point of view, as you are then able to keep all of your accounts in the same place.
There are also lenders which are not attached to a particular bank. These often focus more on second hand car sales. And usually offer a warranty as part of the sale.
In fact some lenders impose a warranty or service plan. To ensure that buyers are covered to pay back their monthly premiums. Even in the eventuality of having to fork out a lot to fix the car.
In Conclusion
As with any finance structure, it’s good to work out exactly what you can afford each month. Taking into account interest rate hikes.
Getting your hands on affordable vehicle finance is relatively easy. As long as you know where to look. In addition you understand all of the conditions associated with the agreement.
This information may also interest you: Can you Buy a Car or get Car Finance while Blacklisted?