The bad news first: Your bad credit rating is not going away soon
A personal credit rating follows you around like a cloud of bees. If your credit is good, you won’t have any issues when you want to purchase big items, but if your credit has gone bad, you are going to have a hard time buying anything. (Can anyone sign surety for your car finance agreement? Find out here.)
Read: AutoTrader's Glossary of Car Finance Terms
Related: Find out about car subscriptions here
If you have bad credit, buying a car through a dealership and acquiring finance from one of the bigger finance houses is going to be very difficult. So what should you do if you really need a car but your credit rating is lower than a wrestler’s IQ?
Get an Instant offer on your old car here
Some dealerships can help, but it will cost you...
There are certain dealerships that have their own in-house finance and will gladly help you, but there are certain restrictions. They are going to charge you a much higher interest rate, the monthly repayments will be higher as they will want to recoup their costs quicker, and they will be much less inclined to let you miss a payment, often repossessing the vehicle after just one default payment. (How much more can you expect to pay for a car if you have bad credit?)
This really should be your last option, and you should only sign the contract if you are 100% sure that you can afford and maintain the agreement, as default will incur heavy penalties that will further damage your credit.
How to buy a car in South Africa with bad credit
Can I finance a car with bad credit?
Yes. Sometimes referred to as a blacklisted loan, it's like a personal loan, but for a person with a bad credit history. You may be able to get such a loan if you are able to offer up security like your house or equity in your home. This is high-risk, as your home can be repossessed. If you can offer security, however, your interest rate will be lower.
How much more can you expect to pay for a car if you have bad credit?
What about an unsecured short-term loan?
A small and unsecured short-term loan is an option, but the interest rate will be uncomfortably high, and you will only be offered a small amount of money. If you're sure you want to go this route, there are a few things to bear in mind; the most important is that the lender has to be registered with the National Credit Regulator (NCR) so that you know they are compliant with the laws that regulate credit providers.
What credit score is needed for car finance in South Africa?
Bad credit lenders
You can view some of the lenders that offer bad credit loans here.
You will be able to apply for a loan online here.
Lend at your own risk!
It's imperative that you do your homework to ensure that the lender is an above-board institution. (Disclaimer: Please note that AutoTrader takes no responsibility for any costs or damages incurred if you decide to borrow from bad credit lenders.)
Who can sign surety for your car finance agreement?
Leasing or renting to own a car
Some institutions offer you a deal where you’ll pay back a fixed monthly payment, which may also cover insurance and a tracker system, over a period of up to +/- 60 months or less. Once you have successfully made all your monthly car payments and reached the end of the payment period, you may purchase the vehicle by paying a final, additional installment. However, should you default on any payments or make late payments, the car can be repossessed, and you will lose all the money you have paid towards it, so be careful before committing yourself to this option.
Use our car finance calculator to see how much you qualify for
