Debt can be both crippling and liberating, depending on the type of debt and indeed, the level of debt a person finds themselves in. Bad debt is the type that leads a person down the path of accumulating more debt and eventually resulting in defaults of various loans or the inability of that person to progress financially, therefore giving them a bad credit score.
Good credit is the type that the borrower can afford and allows them to gain access to finance for shopping accounts, vehicle finance, and home loans while simultaneously improving their credit score, allowing them to progress to a better car, a nicer home, and a better lifestyle in general. But what if you have managed to save a large portion of capital and want to buy a vehicle, is your credit score checked or even affected?
Is your credit checked when you buy a car cash?
A car dealership requires your permission, as a buyer, to access your credit score and also needs a valid reason for wanting to do so. Since this theoretical vehicle purchase is being done with cash, there is no need for the seller to access your credit record since there is no credit being applied for.
Does buying cash affect your credit score?
Since there is no loan or line of credit being applied for when buying a car in cash, your credit score will not be affected by the deal, however, it is important to note that while there are no negative effects on your credit record, there will be no improvement in your record, and if you intend on applying for a home loan or even another vehicle in the future, it is important to have a history of paying off your debts.
What happens when you buy a car cash?
Buying a car cash works out far cheaper in the long run, saving you on interest payments while freeing up some monthly expenditure in the process. However, if you are buying a car in cash and the vehicle exceeds R24 999.99 in price, the dealership must report the transaction to the Financial Intelligence Centre as part of the FIC Act. Failure to do so will result in a hefty fine for the dealership in question.
