Vehicle financing made easy: Here are popular financing options

Those young people eyeing their first set of wheels will know it’s not just about getting from point A to point B.

Owning a vehicle is a step towards independence and empowerment, unlocking opportunities, broadening your world, and giving you freedom.

However, it is a privilege and expense that is not possible for all South Africans.

Vehicle financing can help you out, but it is crucial to understand your options and make clever decisions that fit your budget and future goals.

Popular financing options

Instalment sale: Borrowing the full amount from a financial institution and paying it back in monthly instalments with interest over an agreed period. After your last payment, you have full ownership of the vehicle – great for those planning to keep their car for a long time and build equity in it

Instalment sale with balloon payment: Deferring a part of the car’s cost to the end of your finance term, lowering monthly payments during the contract period, but leaving a lump sum to be paid at the end of the term before taking full ownership

Guaranteed future value (GFV): Essentially financing the difference between a vehicle’s purchase price and its future value – as guaranteed by the lender – resulting in lower monthly instalments than a traditional instalment sale, and transferring the risk of depreciation from you to the lender.

At the end of your contract, you have multiple options including a trade in, taking full ownership, or returning the vehicle.

If you are a young person looking to get your hands on your first ride, look for a bank such as WesBank that offers graduate or youth financing options to help get your financing approved without a credit record.

“For young South Africans, a vehicle is often more than just transport. It’s a critical enabler for career advancement and entrepreneurial pursuits, opening doors to new opportunities,” said head of marketing and communication at WesBank, Lebo Gaoaketse.

Getting started

Make sure to do your research before agreeing to any contract or financing. Compare interest rates, repayment terms, understand the cost of the loan and any fees, and always read the fine print. Choosing the right finance option is a huge step in your journey to financial savvy.

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