Car Financing - How does it work?

This article was posted on 03 June 2016

Posted in Car Finance


Car finance 1

With Car Finance you can easily achieve a more competitive finance deal to what you’ll be offered from any other motor dealership! We can get your request approved with reputable banks and lenders all around South Africa. We can provide you with the best finance packages tailored for your budget and requirements. You can choose your Car Financing at the best monthly premium over a period of time that best suits your needs and without paying a deposit.

How does Car Financing work?

After you found the car of your dreams, you only need to fill in our online application form. You’ll get a super quick answer which will let you know if you pre-qualify for our car finance plans. Our expert will review your application straight away and contact you directly to fulfill your application. Once accepted, you will enjoy the best finance options available and purchase the car you have always wanted.

Car Finance deals

Buying a new car is always thrilling, may it be a brand new model or a second-hand car. Nevertheless, the cost of buying these new vehicles is always a lot less attractive than the car.

You can, like most people do, spend decades comparing different makes or models and then try to negotiate, like your life was depending on it, to get dealerships to lower the cost of vehicles or you can take the time to compare quotes and see what is the best Car Finance deals available on the market. 

In fact, you could pay thousands of rands over the odds by trying to negotiate rather than taking out a Car Finance deal. This is the reason why you should try to understand the different options that is available to you as well as the interest rates & charges involved.

The different types of Car Finance

Hire Purchase plans

Hire Purchase (HP) plans generally need you to give collateral first (in general, your existing car) and commit to a certain number of monthly payments.

Once all the installments have been paid along the defined period of time, the car – which is all yours from the very beginning of the agreement – belongs to you.

However, the provider of your Hire Purchase Plan has the right to repossess your vehicle if, at any moment, you do not achieve your commitment & fall behind on your payment. Don’t worry, repossession is a process which is practiced only as a last resort. For example, you receive a written notice first to give you the chance to pay your outstanding instalments. If you definitely cannot pay the amount that is due, the provider needs a specific court order before taking back your car.

Please do note that you obviously cannot privately sell your car until you have fully paid all the monthly payments. You should also know that ending the agreement early may lead to a penalty. However you will probably be able to part-exchange your vehicle and refinance the rest of your loan even if it could lead to higher interest rates.

Personal loans

A low-rate loan is in general a much better deal to buy a car than a Hire Purchase plan. Above all, you can sell your car to pay your loan if you're unable to afford the monthly instalments. 

However, the lowest rates for personal loans are often limited to bigger amount loans. For example if you want to borrow R20 000, you better increase the amount to R50 000 and take advantage of cheaper interest rates.

In any case, the MisterCompare Loans category of MisterCompare Car Finance Deals is a great place to compare the best deals from many lenders all around South Africa.

Leasing agreements

Leasing agreements are long-term contracts for which you pay a monthly fee in order to use your car during an agreed period and a certain number of kilometers.

They are very popular if you want to drive a brand new car, and have two main forms: Personal Contract Hire or Personal Contract Purchase.

With PCH, you can have a new car for a dedicated period of time without buying it at the end, while with PCP you get the car at the end of your agreement. Either way, always make sure to check terms and conditions for penalties and extra charges.

 


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