But with it also comes the anxiety of knowing that you’re getting into a financial agreement that will not only require a hefty monthly payment but one that can last for up to 5 years, depending on your loan. On top of that, you need to get pre-selected for funding. And as many know, getting vehicle finance depends on more than you having a monthly salary. 

However, with the right knowledge and understanding of the process, you can get the financing you need to purchase your dream vehicle. Whether you are buying your first car or a second one, these tips will ensure you are an eligible candidate for a car loan. 

Assess your affordability

Before you go to a lender or take a look at a vehicle finance app, you need to know how much you can afford. Unfortunately, your salary isn’t how much you can afford. What you can afford is the disposable income you have left after your fixed and variable expenses. That’s the money that will help you determine if you can afford to purchase a car, and what type of car you buy. Lenders have budgeting tools and vehicle finance calculators that can help you determine how much you can afford and show you the likelihood of being a candidate for a car loan. 

Choose a vehicle you’re interested in 

Once you have assessed your affordability, you need to know the price of the vehicle you are interested in. Take a look at both online and in-store vehicles and see which fits your budget. When it comes to finding the right vehicle, you shouldn’t box yourself and only search for one car brand. With so many models and brands available, you need to view them all; you never know what you can find and how the price differs. Now is also the time to decide whether you wish to buy a new car or a second-hand vehicle. While both have their advantages and disadvantages, you need to choose one that makes the most financial sense for you now and in the future. 

Check your credit score 

Before you apply for vehicle financing, you need to know what your credit score is. A good credit score is a vital part of getting pre-selected for financing. Your credit score in South Africa will range from 330 to 850. This shows lenders whether or not you’re a trustworthy borrower and also helps them determine your interest rate. If you have a good credit score, you can negotiate a competitive rate, but you’re more likely to get a high credit score if you have poor credit. The scores range from:

• 800+ is exceptional
• 740 – 799 is excellent
• 670 – 739 is very good 
• 580 – 669 is good 
• 579 and less is considered poor. 

A credit check is a must when it comes to the requirements for vehicle finance. To be on the safe side, it is best to look at your report before going to a lender. This will help you see any false or incorrect information that can cause complications for your loan application. Finding out before can give you time to fix any issues and ensure you’re ready for when the lender does a credit check. If there is no incorrect information, but your score is still low, and you’d like to improve it for a better car deal, then you should try and do the following; 

• Lower your credit balances. 
• Pay your bills on time. 
• Only apply for credit when you need to. 
• Don’t close any existing accounts to ensure you have a payment history on your credit report. 

Apply for vehicle finance

After assessing your budget and finding the right car for you, you can start applying for finance. It’s advisable to seek vehicle finance after you have found vehicles you are interested in because it will ensure you get the loan amount you need. Instead of applying for vehicle finance on estimation and falling short, go in prepared, so you don’t end up buying a vehicle you do not like or not finding one within your budget at all. Here are some steps to ensure your car finance validation process goes smoothly:

• Be over the age of 18. 
• Be permanently employed and meet the minimum salary stipulated by the lender. 
• Provide them with a valid South African ID and driver’s license. 
• Be a South African citizen or have proof that you are a permanent resident.
• Have a good credit score.

Getting car insurance 

When seeking financing from a lender, you are required to get car insurance. Comprehensive car insurance is a requirement for your full term. This ensures that the likelihood of you not keeping to your financial obligations is slim as you’ll be insured should anything happen to the vehicle. But, car insurance isn’t only helpful for the lender; it is also beneficial for you. You will have peace of mind knowing that your vehicle is insured if stolen, hijacked, damaged or in a car accident. Nobody wants to pay the instalments for a vehicle that is no longer operational. 

Final thoughts 

Once you have everything in order, you are ready to get the application order to proceed. Getting approval for vehicle finance doesn’t need to be a challenging process that has you going back and forth. As long as you’re forthcoming with your information and honest with yourself about what you can afford, then you’re all set. We hope that these tips will help you find the car of your dreams and enable you to get it. Happy car shopping!