Everything You Need To Know About Financing Your Car In SA

Car Financing in South Africa


For most South Africans, buying a car is a big financial decision. Because most people aren’t able to pay for a vehicle upfront, they tend to turn to financiers to help finance their vehicle. There are several car finance options available which allow buyers to choose what best suits their needs.


One option to consider when financing your car is leasing. This is essentially renting a vehicle over a longer time period. This usually requires an initial rental payment or fee, which is followed by monthly payments. This is a popular option because your car is still under manufacturer warranty and some leasing options might even include a maintenance plan. After the lease period, the car is returned or the lease could be renewed.

Personal Loan.

In this case, you lend a large sum of money from your choice of financier to pay for the vehicle and own it immediately. You then pay off the loan over an agreed period of time at an agreed interest rate. This usually requires an incredible credit history. This is a popular option for people who are selling their previous cars but want a new car immediately. They could then use the money received from selling their previous cars to pay off their loan as soon as they find a buyer.

Hire Purchase (HP).

This option requires a full payment for the vehicle upfront. This is paid by a financier who then owns your car until you’ve paid off the amount owed. This usually requires a deposit followed by monthly installments. The general rule of thumb with HP’s is that the higher the deposit is, the lower your monthly installments will be.

Personal Contract Purchase (PCP).

This option also requires a full payment for the vehicle upfront. This is very similar to an HP. The difference between a normal HP and a PCP is that a PCP usually includes lower monthly installments, but a large sum of money paid at the end of your contract. When you reach the end of your contract, you can either decide to pay off the aptly named “balloon” payment, or give the car back. If you choose to pay the balloon payment, the car will then officially belong to you.

Of course, every option has its own extensive list of pros and cons.  If you’re unsure of which option might be best for you, you can also approach a trustworthy car dealership to help you choose the best finance option for your budget/lifestyle. This usually involves presenting personal details and documents like a copy of your ID, previous bank statements and proof of residence. The dealership you choose should have a comprehensive list of required documents found on their website or available at request.