You want it. You really, really want that car you’ve had your eye on for so long. You’ve moved yourself along the “it’s just a dream” phase to where — with the right car finance — it’s quite feasibly within your reach.
The world’s been through it though when it comes to over-extending credit; if you’d ever wanted to buy anything pre-2009, chances are there would have been a way to do it. Limitations are stricter now — and for good reason.
Being financially over-extended does no-one any favours. Not the bank who will have to chase you for the money, nor you who will suffer the stress of trying to keep up. So car finance comes down to affordability based on your salary and what your other commitments are — but it doesn’t end there.
If you’ve decided you can afford a car finance repayment per month of R7,500.00 — because that’s what you have allocated to the car portion of your salary — don’t forget that you still have to account for insurance and running costs. And if your car isn’t new and therefore unlikely to come with a service and/or maintenance plan, you’re going to have to budget for that too.
Top Tips For Getting Car Finance
Here’s a quick cheat sheet on the steps you should take when thinking about applying for a car loan:
- Establish your affordability: do a budget of all your essentials to determine what your disposable income is, and then allow for maximum of half that to allocate to your car (don’t forget insurance)
- Determine the extras: we’re not talking mag-wheels or extra sound, we mean the insurance premium and whether service costs should be factored into your budget
- Save up for a deposit: This will work in your favour on many levels; the bank will see your attitude to finance as responsible; it will reduce the capital car loan which means less interest; and it will therefore reduce the monthly instalments. This brings you back to the beginning of the loan application in a way, and already boosts your affordability level
- Settle as many debts as possible: This manages your credit profile in a good way; it shows that you had a balance owing and paid it, therefore making you a responsible lender
How Car Finance Works Explained
What can affect getting car finance?
Trade-in
When it comes to car finance, having an existing car can be both a good or a bad thing.
- It’s a good thing if:
Your existing car is paid up and the value of it counts as a complete trade-in contribution toward your new car loan
- It’s a bad thing if:
The value of your current car is less than the book value / trade-in value. So if your outstanding balance on your current car is R10 and the dealership only offers you R7 on your trade-in, it means you have to add the R3 to new car loan.
Bad credit
Banks are looking to see what kind of lender you are. Reckless… or responsible? You don’t have to have had a judgement against you to be considered a risky lender. Even a few missed instalments way back when you were having a rough time could count against you. You may have been listed as a slow payer. In all fairness, times and your situation have changed, and that institution can be followed up with to update their records. But if you keep bad habits of skipping payments or bouncing debit orders, banks will be hesitant to offer you the car finance for the wheels of your dreams.
With five incredible models on offer from Subaru, we’d like to discuss which model you’re interested in, and how car finance should be applied to get you the best deal. Let’s talk car finance, while we talk about Confidence in Motion.
All our dealerships across the country are equipped to help you find the Subaru of your dreams. Book your test drive today, call us on +27 11 608 0116 or email info@subaru.co.za and a skilled member of our team will be happy to assist you.
