Car Finance

Welcome to the car finance page, where we provide you with explanations, advice, and guidance to help you better understand the world of vehicle finance. We want to help you navigate this often-confusing subject by providing easy-to-read articles packed with useful information to make sure you get the car and the finance deal that best suits your needs.

Unless you intend to buy your vehicle by spending money you’ve received or saved (“do a cash deal”), you will need to secure an instalment sale agreement with an authorised credit provider, usually a bank, to finance the purchase. You can use a deposit and/or the value of your current car (“trade value”) to decrease the total loan amount, which will reduce the value of your repayment instalments (“premium”) for the duration of the instalment sale agreement. 

Unfortunately, many applications for vehicle finance are not successful, because banks need to be fully satisfied that their clients will be able to reliably make their repayments as well as service, maintain and insure their vehicles for the duration of the instalment sale agreement. If you’ve been blacklisted by credit bureaus, however, there are still options available to you.

The first thing you need to do is know your credit score. Cars.co.za has partnered with a company called Just Money, which will show you your credit score for free and explain what that score will mean when you apply for various types of credit. It also offers advice about how to improve your score, because a bad credit score will cost you thousands every month.

Achieving a good credit score is essential to making sure that you get the best finance deal possible. It will ensure that you can get a preferential interest rate from banks (which can be variable – linked to the prime lending rate – or fixed, both are available) to reduce the value of the deposit required for the vehicle and affect the term of the instalment sale agreement.

There are other ways of reducing your repayments/instalments (which are usually paid monthly), such as taking a balloon payment, which represents a percentage of the vehicle’s purchase value that you will need to pay at the end of the instalment sale agreement’s term to own your vehicle outright. There are pros and cons to this, however, but we set them out for you. We also have articles that deal with what you should do when you fall behind on your payments, how to avoid falling into a debt trap when you refinance pre-existing vehicle debt and whether you should apply for finance through a dealer or use a personal loan to buy a car.