Financing a Vehicle

[XennoX]

Interestingly enough, Absa gave me by far the best rate, even as a first time buyer. Got 9.5%, which has gone up a bit due to the repo rate increase by the Reserve Bank.

What did you end up doing, or have you not made a decision yet? I'd reckon it's a good idea to get your credit record up as fast as possible. It's something that holds you back quite a lot later on if you don't have it.

What I did was during December I opened up an Edgars account and made a R2000 purchase on the account and am paying it off at the moment. I should have a good credit record by June.

To finance the vehicle I bought (a bike) my dad offered to take a re-advance on his bond for R50k. The interest rate he gave me (8.5%) is awesome, but the term is pretty short (36 months). This makes my repayments to him are in the region of R1700 a month - a bit more than I budgeted for at R1200 over 54 months with 11.0%, but I've simply cut my entertainment bill to make space. The problem is my entertainment bill is the "What's left over after the debt is paid" part of my income. At the end of the month whatever is left over I stick in a notice account so that it accrues some interest.

 

[hellfire]

What I did was during December I opened up an Edgars account and made a R2000 purchase on the account and am paying it off at the moment. I should have a good credit record by June.

To finance the vehicle I bought (a bike) my dad offered to take a re-advance on his bond for R50k. The interest rate he gave me (8.5%) is awesome, but the term is pretty short (36 months). This makes my repayments to him are in the region of R1700 a month - a bit more than I budgeted for at R1200 over 54 months with 11.0%, but I've simply cut my entertainment bill to make space. The problem is my entertainment bill is the "What's left over after the debt is paid" part of my income. At the end of the month whatever is left over I stick in a notice account so that it accrues some interest.

The Edgars account is a start, but it's nowhere near enough to have a 'good' credit record. I suggest that you get a Virgin Money credit card (because it's completely fee free) and use it for your purchases for a few months. Pay down the outstanding value on your credit card each month. This will really start building your credit history - much more than a single 'loan' that you're currently paying.
Financially, you'll be in exactly the same position as you're spending what you did anyway, just on your credit card. Also, if you're paying your full outstanding balance you won't be incurring interest charges and there are no fees on the Virgin Money card

 

[Drifter]

Venomous, I am working with vehicle finance. It is my job. The original question was about car finance. I say again; you can not buy a car without an appropriate license. It is illegal. The private individual who is doing the finance must have the license.

If you buy a car/bike cash or with a personal loan/second bond to give to your child, you do not need a license as it is not vehicle finance.

For a boat you do not need a skippers license.

Anyone who wants to try to finance a car/bike without a license will waste their time.

Exactly that. My last finance application could not be finalized because the copy of my drivers license was not clear. HAd to give then a new copy before deal was approved.

 

[MrR]

The Edgars account is a start, but it's nowhere near enough to have a 'good' credit record. I suggest that you get a Virgin Money credit card (because it's completely fee free) and use it for your purchases for a few months. Pay down the outstanding value on your credit card each month. This will really start building your credit history - much more than a single 'loan' that you're currently paying.
Financially, you'll be in exactly the same position as you're spending what you did anyway, just on your credit card. Also, if you're paying your full outstanding balance you won't be incurring interest charges and there are no fees on the Virgin Money card

+1, but IIRC, paying off the total debt on the card every month, or within 55 days, will be less effective than actually paying it off over a period. It's catch-22 right there - pay off full amount each month and get a lesser improved credit score or pay off over a period and incur interest, but receive a better score.

Take the interest rate consideration and future rate hikes into consideration as well. See this article for basic info
http://www.fin24.com/Money/Vehicle-Finance/Interest-rates-To-fix-or-not-to-fix-20140325

As for financing options
Wesbank (FirstRand/FNB) is most likely the biggest and well used financier
AVAF (Absa's Vehicle and Asset Finance)
MFC (Nedbank)
Stannic (Standard Bank)

You might get a better deal if you go through your own bank, but also have a look at what the dealership is offering and what other financiers are offering. My last deal worked out cheaper going through the Dealership's financier, than what it did when I applied for it myself at the same financier.

The other option, but this is last/worst case scenario and should even be considered, is to take up an unsecured loan. Interest rates are fixed, but much higher than a secured loan, so you'll be paying back much, much more at the end of the day. Personally, I wouldn't go this route if it wasn't an absolute necessity/emergency.