For most, a car will be the second most expensive purchase (behind purchasing a house) and for some, it will be the most expensive thing they ever buy. South Africa's limited public transport services mean that cars are often an essential purchase, ensuring that they can get to and from work daily. This necessitates vehicle financing in most cases, as it's no secret that cars are very expensive to buy outright.
You have a job and you're working for a salary but now you're wondering if you can buy a car if you earn R5 000 a month. Unfortunately, most finance institutions require that your minimum salary be no less than R6 500 per month to qualify. Finance institutions will in most cases only finance a vehicle if it costs more than R30 000 and to meet the requirements, you will have to earn more than the stipulated R6 5000. Be careful though as you will need to calculate how much of your monthly salary you can spend on a car each month.
These same institutions will also require a credit score of more than 660 to qualify, so if you are earning more than R6 500, you may be denied financing if your credit score is too low or there are judgements against you. This will have to be rectified before reapplying for finance.
What are your options?
If you fail to meet this minimum criteria there are a few options you can explore.
- Surety
Having someone trusted who qualifies for finance sign surety for you can help you get your finance application approved. They will be held responsible for the contract and any payments that are missed.
- Rent-to-own
An increasingly popular method of getting behind the wheel of a car, the rent-to-own model sees you paying a set amount each month (often less than the instalments when financing) until such time as the vehicle is paid for in full. This process takes a longer time and until you make the final payment, the car belongs to the dealership, but the model is very similar to that of financing.
- Leasing
Leasing is similar to the rent-to-own model expect that you never own the vehicle outright. A monthly fee is paid to the dealership and they grant you use of the vehicle for a period of time. Think of it as a long-term car rental. You are then given the option of switching out the car after a period of time for another model.
