Now imagine the amount of paperwork you’ll need to get familiar with when it’s on credit. Luckily, we have a few tips and tricks on how to prepare to buy a car on credit, and some of the things you need to be careful of.
Firstly, weigh your options
Before committing to any financial obligation, do your research and have options. You will be entering into a financial agreement that is going to require money from you on a monthly basis, so you need to ensure you are paying the right amount for the right thing. Take a look at a few options around the car brand you want, look in both the new and used cars section, and compare prices. If you are talking to a car salesperson, mention your research too. This may help you cut a deal with them.
Have the proper documents
As mentioned earlier, you will be entering into a serious financial commitment when you buy your car on credit, and so will the credit provider. The financial services provider that is ensuring that you have funds for your car needs to be assured that they will get their money back, with interest. So, you will need to have the right paperwork when applying for financial assistance. Depending on whether you are applying as an individual or business, here is what you need to produce:
For registered businesses:
- Business registration papers
- 3 months’ stamped bank statements of the business and all members
- Proof of address for the business
- Proof of address for all members (account or utility bill not older than 3 months)
- Copies of all members’ IDs
For individuals / self-employed:
- 3 months’ payslips (overtime or commission to be stated)
- Copy of ID
- Proof of address (account or utility bill not older than 3 months)
- Copy of Driver’s Licence
- 3 months’ bank statements (Stamped)
- If married – spouse payslip & certified copy of ID (Include driver’s licence if available)
Take how much you need
When applying for a loan, sometimes you will find out that you qualify for an amount higher than the one you were planning on borrowing, and it may feel like a good option to take it.
First figure out what you will use or need the extra loan money for; do you want to have it in the bank as a safety net for a rainy day? Are you planning to use it for servicing the car? Or do you maybe want to start a business and the extra money will aid in that? Once you have the answers to these, you will know how much to borrow.
You can also calculate how much your premiums will cost monthly using a car instalment calculator on most vehicle finance service providers’ sites to see how much responsibility is needed from you on a monthly basis, so no payments are missed.
Beware of rip-offs
How many times have we heard stories about people who bought the same car from the same person? Or heard of someone who bought a car but never drove off with it?
Most of the time, these incidents occur with private sellers, where potential drivers are scammed into thinking they are buying a car, but then nothing happens as soon as they make a deposit. Some car dealerships that aren’t registered or regulated may also be part of such a trend. That is why it is important to research the car sales dealership you are thinking of getting into an agreement with to avoid having to settle an amount for a car you didn’t buy.
Choosing your ride
While the loan or financial assistance you have will determine which price range to look at, always go the extra mile. Go for a car you know will not be too costly on maintenance because you already have a five-year debt that needs to be paid monthly. If your vehicle is more bakkie than car, you can consider renting it out or helping provide a moving service to ensure you make money to help maintain it. Your car, your plans, your rules.
Final words
When it comes to buying a car, cash may be king, but credit sure is the knight in shining armour, ready to rescue those with no cash. Consider financial assistance, but do your research too.