So, the graduation rush has finally settled, and you are ready to start your new life as a working adult. One of the first things you are interested in buying is a car, and while this may be exciting, it can become overwhelming and stressful if you do not have the right tools. In this article, we will take a look at how graduates can manoeuvre car affordability, prepare you for the expenses associated with owning a car, and where you can get help for financing your first set of wheels.

First; how to buy 

One of the age-old questions graduates ask when buying a car is whether they should get a new or used car. Due to affordability and many used car dealerships being trustworthy in South Africa, a used car is often the chosen favourite. This is because it will lean more on the affordable side, you will get a full report of the car’s condition, and some of these used car dealerships are in partnership with financial service providers to give customers affordable payment terms.

If you have been saving up to buy your first car and are ready to make that deposit, this can be helpful for your premiums too. Paying a large deposit can help lower your monthly instalment, making it even easier for you to afford the wheels you currently dream of having.

One of the things you can also consider as a graduate instead of buying a car is leasing it. This phenomenon is not too popular in South Africa; however, leasing can show and prepare you for vehicle costs when you finally decide to own one.

Calculate your costs 

The last thing you need on an entry-level salary is to purchase a vehicle that takes half of your income. This will leave you strapped for cash during the month and ultimately make your vehicle a financial burden and not a viable solution for your lifestyle. Plus, there is more to owning a car than the cost of the vehicle. You will need to be prepared for petrol and other liquids costs, maintenance and service, unfortunate events and even the costs of cleaning the car. Consider drawing up a budget of how you spend your money on different things; rent, saving and investing, groceries, and more, and see how having a car will affect the budget. Once you calculate your costs, you have pretty much figured out what car you can afford.

FYI 

When it comes to purchasing a vehicle, you will need additional financing to cover the expenses, even if you have a deposit. Vehicles are costly in South Africa, so much so that many people cannot afford to purchase a vehicle without financing it. This can be an issue for graduates, as financing needs a credit score, which is almost impossible to have right after university or college. Fortunately, some lenders have graduate finance programmes that are tailored for graduates entering the workforce and who have no credit score. Graduate finance in South Africa will ensure that you have a chance to get pre-selected for your vehicle of choice.

Purchasing on a graduate’s average starting salary

Before anything else, it’s important for you to understand how credit works. To get vehicle finance, you need to have a good credit score. A credit score shows your likelihood of sticking to your loan agreement. Your credit score can be in the following brackets:

• 800 and more: Exceptional score with impeccable finance deals
• 740 – 799: Excellent, also has good finance deals
• 670 – 739: Very Good
• 580 – 669: Good
• 579 and below: Poor

As someone who has never had any prior credit, you are more likely to have a low credit score. However, that does not mean you cannot afford to get a vehicle on your average monthly salary in South Africa. Lenders have a graduate car finance programme that helps recent graduates qualify for vehicle finance. With this, you’ll be able to afford the cost of the car and pay an affordable monthly instalment.

Remember, you are at the start of your career, and so is your salary. You will get car financing that is suited for you and your salary at the time until you are able to afford more.

Qualifying for graduate finance 

To qualify for graduate finance, you need to be under the age of 31, a recent graduate and employed or have a contract stating that you will be employed after a certain date. Your degree or higher diploma needs to be no more than three years old. When it comes to salary grades in South Africa, lenders understand that they are low, especially when you start out. Therefore, they are offering financial assistance to any graduate with a monthly income of R10 000 or more. You also need to ensure that you have the financial means to enter a financial agreement. This simply means that you need to have the financial means to afford to pay the agreed monthly repayments on the vehicle as well as car insurance, petrol, services and maintenance.

How lenders check affordability

When you’re a graduate, it is difficult for lenders and financial services providers to be able to tell the kind of borrower you are because you will not have a record of your payments and accounts. So, most of the financial service providers will help you figure out your affordability through the graduate finance affordability calculator. This will help you highlight your income, the expenses you incur on a monthly basis and then draw from there how much you can afford to loan and repay the financial service provider.

Have your papers ready, always

You want your application to go as smoothly as possible. Whenever you apply for a loan, lenders have documents that they require from you. This helps them verify the information you have given them and ensures that you are who you say you are. Those documents include; your proof of address, identification, your driving licence and proof of employment. Having all the necessary documentation at hand will ensure that the process is fast and effective, helping you secure the loan for your vehicle. With technology, it is now even easier to apply for financial assistance. There are apps and website applications that ensure your application is attended to in a timely manner. Some lenders even promise a certain period of time to respond so that customers can know as soon as possible if they have qualified for vehicle finance.

Final words 

It is exciting to enter into a new milestone in your life with the right car for you. Remember, it is not advisable to burden yourself with the main car that you desire if you just graduated, especially if the car is expensive. Getting your first car to help you achieve your dreams can be an affordable step in the right direction. Never stop researching and asking your car dealership or financial service provider for tips on how to conquer the graduate finance world.