What is a pre-approved car loan?
With hundreds of thousands of new and pre-owned vehicles being purchased in South Africa annually, many of which are financed by their owners, understanding the intricacies of a vehicle loan is certainly beneficial for us as consumers. When we have decided to pull the trigger and purchase a new or used vehicle, many of us will apply for finance; however, there is a way to have pre-approved finance.
In short, this means that you are guaranteed to receive a loan from a specific financial institution before selecting the vehicle you wish to purchase. This pre-approval does not mean you can finance any car you want but is rather a pre-arranged amount that the bank is willing to loan you. While this may seem like you are going about things the wrong way round, pre-approval is beneficial as it gives you a budget from the get-go while ensuring finance and, therefore, avoiding disappointment.
Related: AutoTrader's Car Finance Glossary of Terms
How does one qualify for pre-approval?
As with any loan from a financial institution, the applicant should have a good credit record, a valid South African driving licence, be permanently employed with a fixed monthly income and be a local resident that is 18 years or older. The application for a pre-approved loan will see that the financial institution completes the requisite credit checks, ensures what type of vehicle the applicant is licensed to drive and then determines the amount that they can loan.
