How Does Vehicle Finance Work in South Africa
What is called vehicle finance?
Vehicle finance is a loan given to you by a financial organisation such as a bank that pays for the vehicle you want to buy and allows you to pay it back over the course of several months.
How does vehicle finance work in South Africa?
The bank pays the dealer in full on your behalf, and you repay the loan with interest in monthly instalments over an agreed-upon term of 12 to 72 months.
What is the interest rate on vehicle finance in South Africa?
Interest rates typically range from 7% to 18% and are computed based on your specific credit score.
Do banks hold title to vehicles financed by them in South Africa?
The bank will have the title to your vehicle during the loan repayment period, but you will be able to use it as needed. When you have successfully paid off the loan, ownership is transferred to you, and you own the vehicle outright.
Does the bank pay for maintenance cost of the financed vehicle?
You are responsible for the vehicle’s maintenance, upkeep, operating costs, and insurance.
Should I get comprehensive insurance for a bank-financed vehicle?
Comprehensive insurance is required by law when a vehicle is financed through a finance agreement with a bank or financial institution.
Who qualifies for a vehicle finance application in South Africa?
The applicant must be:
1. Be 18 years old or older.
2. Be a permanently employed salaried individual, earning a minimum salary of R6500 pm.
3. Have a valid South African driver’s license with no endorsements.
4. Be a South African citizen or permanent resident,
5. Have a good credit history.
What documents are required to apply for vehicle finance in South Africa?
1. Copy of a valid ID Document
2. Proof of address
3. 3 months bank statements (more if self-employed)
