Financing a vehicle in South Africa these days can be a daunting task, with strict credit requirements and rising interest rates.
If you’re in the market for a car, you will need to prepare yourself for the process of applying for vehicle finance. Here are some of the steps you may need to follow.
Make sure your credit record is spotless
When you apply for vehicle financing, you are asking the bank to trust you with a very valuable asset. Since the bank pays cash for the vehicle and allows you to pay it off monthly, they need to have confidence in two things about you:
- You earn enough and have enough spare cash to afford a monthly instalment
- You are likely to pay your instalments reliably each month
Banks process millions of credit applications each year, and they need some way of knowing whether a customer will pay consistently.
For this reason, they use your credit score to determine how reliable you will be at paying your instalments. Even if your income is high, a poor credit rating may result in your vehicle financing being rejected.
Settle any outstanding debts
If you have late payments or credit judgements on your credit record, you will probably have considerable difficulty in applying for vehicle financing. If you’d like your application to be successful, you will have to settle any debts in full and send proof of payment to the credit bureau.
Depending on the amount involved, paying off your outstanding debt may take you several months or years. In the meantime, it will be extremely difficult to apply for credit.
Don’t skip any payments
Late credit card and retail account payments can lower your credit score – and if you’ve skipped payments in the past, you’ll need to pay regularly for at least 24 months before your credit score returns to normal.
Is this the only way of applying for vehicle financing?
If cleaning up your credit record sounds difficult (or even impossible) right now, you may not be able to apply successfully for vehicle financing – but there is another, simpler way to buy a vehicle.
By opting for a rent-to-buy payment agreement, you will enjoy the convenience of monthly payments without the hassle of credit checks. As long as you earn at least R12 000 a month and are able to pay a minimum deposit of R10 000, this option may be the right one for you.
To find out more about the rent-to-buy option for owning a vehicle, today. Our team is on hand to answer any questions you may have.