Vehicle Finance Loans are a type of debt that requires borrowers looking to purchase a vehicle to pay for a car in monthly loan installments while the lender purchases the vehicle on their behalf.
Lenders such as banks have got many vehicle finance loans which borrowers can make use of, and some of these includes Installment Agreements, Balloon Payment Option and Rate Payment Options from Nedbank, Dealership Finance and Private Vehicle Finance from FNB just to mention a few.
Before you make that first step of applying for vehicle finance just make sure your budget can accommodate a car loan before lodging in your application.
To get better loan terms you should also consider putting down a greater down payment to will the monthly payments over the life of the loan.
How do Vehicle Finance Loans in South Africa Work?
The way vehicle finance works is that when you apply for a car loan the lender buys the car on your behalf and pays for it in full.
In exchange, the car will be technically owned by the lender and you’ll make monthly loan payments to the lender, plus interest, before the vehicle is transferred into your name.
Most of the vehicle finance loans available are secured loans, which means that if you default on your payments, the bank or lender will repossess your vehicle.
Some lenders, on the other hand, can provide unsecured loans to borrowers with excellent credit. Unsecured loans in general have higher interest rates than secured loans.
The good news is that there are plenty of lenders in South Africa that you can approach and apply for a vehicle loan, and some notable names include FNB, ABSA, Nedbank, Wesbank, Standard Bank just to mention a few.
If you have a poor credit history, you can still get the opportunity to apply for vehicle financing in South Africa. This is due to the fact that the lender will use the vehicle as insurance and will be able to seize it if you do not repay the loan on time.
Lenders also have minimum and maximum loan amounts that you can apply for when you want finance to buy a car. They usually only fund loans of at least R30 000; anything less is usually turned down.
The age of the car you’re buying is another point that is taken into account by loan companies. Some will only allow anyone that wish to purchase vehicles that are at least ten years old while others may expand that to 20-year-old models, which will be beneficial to those seeking to purchase used vehicles.
Models that are vintage or antique are exceptions to the trend, since their worth increases as they mature.
South Africa’s Best Vehicle Finance Loans Providers
The best car loan providers in South Africa are listed below:
Wesbank Vehicle Finance Loans
Wesbank is a reputable lender that offers flexible vehicle finance options that include Dealership Finance and Private Sale Vehicle Finance.
Wesbank is part of the First Rand Group and is an accredited financial services provider that not only offers vehicle finance loans but also provides insurance and personal loan services.
FNB Vehicle Finance Loans
FNB is one of the popular vehicle finance providers in South Africa with various finance options that include Dealership Finance which is for vehicles that is not older than 10 years and sold at a dealership, Private Vehicle Finance which is for cars bought from private owners and models up to 20 years old and lastly Leisure Finance which is for leisure vehicles such as caravans, trailers and so on.
ABSA Vehicle Finance Loans
ABSA is among the top five biggest banks in South Africa that provides various financial services, among them being their vehicle finance loans. Their vehicle loans includes Instalments Sale Agreement, Lease Agreement, Rental Agreement and Islamic Vehicle Finance options.
Standard Bank Vehicle Finance Loans
Standard Bank Vehicle Finance comes in two forms – Installment Sale which allows you to pay for the vehicle you want in monthly installments and Financial Lease which lets you lease the vehicle for an agreed period of time and have the option to buy it at the end of the lease.
Nedbank and MFC (Motor Finance Corporation)
MFC in partnership with Nedbank offers personalized vehicle finance options that includes Instalments Agreement, Balloon Payment option and Rate Payment options.
Obtaining Vehicle Finance Loans: What do I need?
Many lenders have easy online application forms that you can simply complete and apply. They can now tell whether your offer for a car loan would be accepted or not based on the information you provide.
To be considered for vehicle financing in South Africa, you must meet the following criteria:
– A South African resident who is at least 18 years old (some may require that the applicant be at least 21 years of age).
– You must be able to drive and hold a valid driver’s license.
– Having a monthly income of at least R6,000 and provide your latest three months pay slips.
– Provide your latest proof of address such as a utilities bill that is not older than three months.
– Provide your recent three months bank statements.
Depending on the ability to repay and the down payment you will make on the vehicle loan, the repayment term will extend anywhere from 12 months to 5 years.
One of the most important things to consider when applying for vehicle finance is to check to see if the car you’re buying is covered by insurance.
Nobody knows when an injury will occur. When you pull the car out of the showroom, it’s not difficult to get into one right away. With auto insurance, you can be assured that your vehicle is covered in the event of an unforeseen event like this.