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Car Finance

 What are my options for buying a car?

So, you’ve decided it’s time to buy a car. Whatever your reasons for buying a new or pre-owned vehicle, here are a few things you should be aware of before making this giant leap.

What is vehicle finance?

Not everyone can afford to buy a vehicle cash. Most people need to take out a loan to buy a vehicle. They usually pay a deposit, and then pay the rest of the cost off over the course of a few years to their financial provider. You can finance your car through your dealership, bank, or an independent provider.

Why can’t I just buy my car cash?

You definitely can, if you can afford it. By cash, we mean transferring the total cost in one transaction. Dealerships cannot accept more than R25k in physical cash. The benefits of buying a vehicle cash is that you completely avoid paying interest (which becomes a large sum of money when you pay your vehicle off over 4 or 5 years).

The downside of buying a car cash is that you won’t build any credit. If you’re planning on buying a house or making another huge financial decision and you need to improve your credit score, you can consider financing your vehicle. The higher your deposit is, the lower your monthly premium will be.

Should I buy a new or a used car?

The number of reliable, used cars that can be bought for the same money as a new entry-level Polo Vivo hatch, is staggering. But, as always, it pays to be careful what you buy. A 5 -year-old BMW F20 might seem like a steal at only R190 000 (as an example), but remember that it’s a complicated car with lots of intricate parts – and when it does go wrong, it will cost you a fortune to repair.

Should I be buying from a dealer or buying privately?

While the private seller’s car is perhaps being sold for a better price than the dealership’s, the bank will most likely not finance private sales. If you can secure a personal loan beforehand (preferably not from a loan shark!), there are some good deals to be had from a private seller. But it has its pitfalls too.

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