Motor vehicle ownership is a privilege only afforded to a few. Even fewer are able to buy a vehicle, of any sort, outright with cash. It's a sign of the times we live in; the general economy and the ever-increasing cost of motor vehicles have placed them out of the reach of many. When you factor in South Africa's dismal public transport offerings, it forms a rather sorry tale of necessity where we're forced to buy expensive vehicles in order to simply survive. Can I buy a car if I earn R5 000?
Related: Personal Loan vs Car Finance – what is the difference?
We're not all going to be able to afford brand-new vehicles and the majority are compelled to shop in the used car section of the market. Even these pre-owned offerings can be rather expensive and in most instances, you will have to finance the purchase through a bank or similar financial institution.
For the longest time though, banks were reluctant to finance a vehicle older than 10-years-old with some refusing to grant financing to anything over 8-years old in some instances. This has a lot to do with the value of the vehicle after such a period of time and the fact that a vehicle older than 10-years will be prone to wear and tear that can often render the vehicle uneconomical to maintain. We can't ignore the fact that this was also a ploy by the banks, forcing our hands to buy newer vehicles.
Can you finance a 10-year-old car?
While it is true for many, that a car older than 10 years cannot be financed, there are a few institutions that have modified their lending options to help the consumer get into a car, even if it is slightly older. They have realized that vehicles 10 years old and older can often still be in a rather acceptable condition but still too expensive to purchase with cash. It's for this reason that they're offering tailored loans for vehicles of this stature.
Not all banks will offer finance for a vehicle of this age, but we've managed to identify three trustworthy options that can help you get the financing you need for that next car. These offerings were correct at the time of writing, and it's best to double-check that nothing has changed in the interim.
Capitec
Capitec offers an unsecured loan for older vehicles and introduced this plan just before lockdown came into effect in 2020. While an unsecured loan can be riskier than a dedicated vehicle finance agreement that secures the loan against the value of the asset (the vehicle in this instance). In order to safeguard themselves, Capitec will only offer a higher than the normal interest rate for loans on cars older than 10 years.
First National Bank/Wesbank
Some qualifying customers will be able to secure an FNB/Wesbank for a vehicle up to 20 years old. Some conditions do come into play though and the finance price has to be more than R30 000 after the deposit, and customers can expect a higher than usual interest rate as well.
Nedbank
Nedbank is prepared to offer personal loans for vehicles to help clients finance their next vehicle. As with Capitec, this is an unsecured loan, so the risks are higher, and one can expect the interest rate to match, coming in higher than anticipated.
Beware
Purchasing an older vehicle is not without its own risks. As we mentioned earlier, these vehicles are more prone to failures as normal wear and tear start to hinder the daily operation of the vehicle. For this reason, the likes of Wesbank will probably require that you take out an additional third-party warranty to cover any such failures. This will cost you extra, and while it can be added to your finance agreement, it will push your monthly instalment sup as well.
