What is private vehicle finance?

There are few people today who can afford the luxury of buying a car, whether it is new or used, without financing. Applying for car financing when buying a car through a dealership, is always an option, but many people do not know that vehicle financing is also available for the purchase of a car from a private individual.

Private vehicle finance can be done through a bank or other financial institution. It allows you to buy or sell a vehicle privately, finance a vehicle up to 20 years old and finance a vehicle for at least R30 000 after the deposit.

What do you need to qualify for private vehicle financing?

As with everything, private financing is subject to certain qualifying criteria. You must be:

  • permanently employed earning a monthly salary of at least R6 000 before tax
  • at least 18 years old with a valid drivers license
  • have a clear credit record.

It should be noted that the qualifying criteria, vehicle age and mileage differs from lender to lender, so be sure to shop around for the deal that best suits you. Some lenders will go so far as to stipulate that the vehicle must be tested at one of their approved testing stations to ensure you are not buying a ‘lemon’.

The buyer will also need to pay for the TitleGuard service which is in place, to ensure the seller is the legitimate owner and that the vehicle has not been rebuilt or involved in any major undisclosed accidents. This service can be paid for separately or incorporated into the loan amount.

When applying for private vehicle finance, you will need to provide certain documents, including proof of income (usually three most recent pay slips), a green South African bar coded identity book, a valid South African drivers licence and proof of residence. Foreign citizens residing in South Africa must supply a valid passport and work permit.

Not always the last resort

Of course there are other options when it comes to buying a vehicle, not least the rent-to-buy programme where, regardless of your credit status, you can buy a quality pre-owned vehicle. This programme is ideal for those who do not qualify for private finance.