Car Finance

[Sinbad]

Agreed, vehicle finance is till regarded as short term debt. Hence the difficulty in attracting low interest rates unless one has an outstanding credit record.

Yes, but not relevant to settlement penalties/notice period.

 

[Drifter]

That makes no sense.


You could have signed up for prime minus .5 and just settled after 6 months. Simple.

My post was to illustrate how they operate. The lady from the bank said they do this because the banks generate their income from the interest paid on the loan. If they give a low rate on a short term, less profit.

 

[MikyMouse]

My post was to illustrate how they operate. The lady from the bank said they do this because the banks generate their income from the interest paid on the loan. If they give a low rate on a short term, less profit.

But you could still pay off a longer term much quickly - thus benefiting from the lower interest rate. Again provided that there are no penalties, but by the looks of the discussion above these early termination penalties only arise with larger loans of R250K and above.

 

[MikyMouse]

Hmm.
You must check that then. Sometimes they do the finance agreement for 290k, don't let them do it.

Thanks I'll keep and eye out for this

 

[SinghDude]

My post was to illustrate how they operate. The lady from the bank said they do this because the banks generate their income from the interest paid on the loan. If they give a low rate on a short term, less profit.

Ja, banks are legal criminals. The system is capitalism at its very best.

 

[MikyMouse]

So while we're on the topic what is considered a good interest rate on vehicle finance these days? I see Nedbank / MFC's default rate is 12.75% and Wesbank's is 12% - these sound quite high...

 

[rorz0r]

There's no need to approach another dealer with a different term, just ask the F&I person at the dealer you're buying from to get a few quotes with different deposits, terms and residuals (if you intend on going that route). Then basically just go for the one with the lowest rate, but pay in more if you can.

 

[MikyMouse]

There's no need to approach another dealer with a different term, just ask the F&I person at the dealer you're buying from to get a few quotes with different deposits, terms and residuals (if you intend on going that route). Then basically just go for the one with the lowest rate, but pay in more if you can.

perfect tx!

 

[SinghDude]

So while we're on the topic what is considered a good interest rate on vehicle finance these days? I see Nedbank / MFC's default rate is 12.75% and Wesbank's is 12% - these sound quite high...

You are doing well if you are getting prime + 1 IMO


Who do you bank with ?

Have you had vehicle finance previously ?

 

[TheBadMadMan]

I feel the Sales guy in the OP has given valid advise IF the interest rate of the longer term agreement is LOWER than the shorter term AND if the OP pays the debt withing the same time frame. (ie. 48 months @ prime+3% payed off in 48 months vs 72 months @ prime+1% payed off in 48 months).

EDIT: Percentages are completely made up for simplicity sake.

 

[MikyMouse]

You are doing well if you are getting prime + 1 IMO


Who do you bank with ?

Have you had vehicle finance previously ?

Capitec and nope, this will be my first car to be bought myself. My credit score is 950 odd the last time I checked though

 

[MikyMouse]

I feel the Sales guy in the OP has given valid advise IF the interest rate of the longer term agreement is LOWER than the shorter term AND if the OP pays the debt withing the same time frame. (ie. 48 months @ prime+3% payed off in 48 months vs 72 months @ prime+1% payed off in 48 months).

EDIT: Percentages are completely made up for simplicity sake.

Thanks - exactly what I was considering

 

[SinghDude]

Capitec and nope, this will be my first car to be bought myself. My credit score is 950 odd the last time I checked though

/Off topic


Have you considered the cost of insurance ?

First time car buyers with no insurance history normally get screwed.
....also dependent on age and other variables...

 

[MikyMouse]

/Off topic


Have you considered the cost of insurance ?

First time car buyers with no insurance history normally get screwed.
....also dependent on age and other variables...

It is at the back of my mind and with the polo I was getting a great rate bcz it was registered in my mother's name... Once my current claim has been finalized I'll call my insurance and find out what they'll charge for each of my car options.

 

[SinghDude]

It is at the back of my mind and with the polo I was getting a great rate bcz it was registered in my mother's name... Once my current claim has been finalized I'll call my insurance and find out what they'll charge for each of my car options.

oh ****.


Well if you have been involved in a recent accident and damages were exorbitant you could be in a spot of bother..... premiums could be high !!!

 

[Hamster]

Not sure about getting a lower interest rate. If true then it could work. But settling it in 48 months means that you do not pay the R57 service fee for the remainder of the term and you do not pay interest on the remainder of the term. This part makes sense.

I financed a new vehicle yesterday which I'm planning on settling in the next couple of months. But, the guys told me that if I settle early they take the R57 service fee x the months left over on the loan term and add that to the settlement amout.

So, you owe another R100,000 and have 10 month's left to pay. Your settlement amount is R100,570.

 

[Sinbad]

I financed a new vehicle yesterday which I'm planning on settling in the next couple of months. But, the guys told me that if I settle early they take the R57 service fee x the months left over on the loan term and add that to the settlement amout.

So, you owe another R100,000 and have 10 month's left to pay. Your settlement amount is R100,570.

They're not allowed to do that.

 

[shooter69]

I financed a new vehicle yesterday which I'm planning on settling in the next couple of months. But, the guys told me that if I settle early they take the R57 service fee x the months left over on the loan term and add that to the settlement amout.

So, you owe another R100,000 and have 10 month's left to pay. Your settlement amount is R100,570.

Why? Your service fee gets adder per month?

 

[Hamster]

They're not allowed to do that.

Well I hope not. I'll make double sure when I ask to settle.

 

[Hamster]

Why? Your service fee gets adder per month?

Hey, I'm no expert in these things. That's just how I understood it from the guy finalising the sale. To me it sounds like BS because it is charging for services not rendered. Sindbad reckons it is illegal so I'll report back come July.