We don't need to tell you that cars are expensive. While some countries have used cars so cheap that you can buy them with the small change you find between the cushions of your couch, in South Africa, the most common way of being able to afford a car is through a finance agreement. This is where you enter into an agreement with a bank for them to loan you the money needed to buy a car. You simply pay them back a small amount of that every month until the debt is paid off.
Related: Paying for a car: cash, finance, or personal loan?
Vehicle finance remains one of the best methods of loaning money to cover a depreciating asset. It often offers you the lowest interest rate you can get on a loan, better than a credit card and far better than a personal loan, so it's easy to see why South African consumers gravitate towards financing a car, rather than leasing of taking out a personal loan.
Do you have an existing finance agreement but want to cancel it? You can find out more here.
If you're looking to finance a vehicle and haven't done so before, (Need to know who can sign surity on a finance agreement for you? We have the answer here) or if it's just been a while since you've done it, here are the documents you will need to get the process going.
Required documents
When you start the application process, you will need some documents. These are the documents required for either the bank, financial institution, or F&I consultant at the dealership where you are looking to purchase the vehicle, to start the application process.
- ID
You will be required to provide a copy of you ID and if it is not a certified copy of your ID, the original document will have to be presented. In some cases, your green, barcode ID book or ID card will suffice and the dealership will be able to make a copy of it for you.
- Driver's license
You will need to provide a valid South African driving license for finance in South Africa. This does not count as your form of ID and copies will either be made or requested.
- Proof of income
Finance can only be granted to applicants who earn R7 500 or more each month and the institution will require proof of this. Your most recent payslip will suffice for this instance.
- Proof of residence
You will require a form of proof of residence to verify your home address. This can be a rental agreement, utility bill or even another account that states your address on it.
- 3 months bank statements
The institution will require three-months bank statements to verify that you have long-term employment and a reliable cash flow. If you are self-employed, the bank will want to see bank statements dating even further back, so be prepared with approximately 6-months worth of bank statements. Check with the institution you are applying with as to how many they require.
It's important to note that even if you have all of these documents you may not be approved for finance. The finance agreement is based on your affordability and credit profile, these documents are the ones required to get the process started.
If you are not a South African citizen then click here to find out how you would go about purchasing a vehicle in South Africa. Buying a car in South Africa as a foreigner
Do you want to sell your car?
We can help! We now make it easier than ever to sell your car, with the introduction of our new Instant Offer service. After following this simple 3-step process, you will get a market-driven valuation for your car within minutes, and a solid cash offering within hours – safely, conveniently, and with total peace of mind.
