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Can’t afford a new car? Here’s how to structure with vehicle finance

You need to buy a vehicle but you can’t afford a new one and you decide to buy a used car instead. The used car may come from a private seller or from a dealer who perhaps can’t help you with finance. If you don’t have the cash, how can you do it? Most dealers are not able to finance older vehicles, and private sellers are only interested in cash.

The answer could be to apply for a vehicle finance loan from an Authorised Financial Services and Credit Provider who deals with such matters. It is possible to obtain private vehicle finance subject to approval by the credit provider. The size of the loan typically starts at around R30 000 and goes up from there, according to your ability to service the loan. Repayments usually range from 12 to 60 months, and various plans are available such as leasing or instalment sale. If the payments seem too high initially, it may be possible to arrange lower monthly payments with a lump sum or “balloon” payment at the end of the term. This does mean however that you should try to save up enough money every month to pay the final lump sum.

As in the case of personal loans, it is necessary to take out insurance in case something unforeseen happens to you and you are unable to make the payments. The lender will require certain information from you when assessing whether they can grant you the loan. This information includes the make, model, model year and mileage of the vehicle you intend buying, the seller’s details, a copy of your ID and Driver’s Licence, a utility bill, a copy of your latest bank statement showing your salary deposit, a copy of your latest payslip and your spouse’s employment and salary details (if you are married).

Most major banks in South Africa like Wesbank and Nedbank offer some fantastic loan deals.. Be sure that you are happy with all the terms of the loan you are offered, and shop around for the best deal before entering into any agreement. You should also be sure that you understand all the terms of the agreement before you sign. You should also take into account that if interest rates rise over the period of the agreement, you may be required to increase your monthly payments unless you go for a fixed interest option. Ask for the different options and their costs to be explained to you.

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