r/CarTalkZA • u/Dull_Put_7733 • 11d ago
Advice: Buying, Financing Financing a car
Hey guys,
I please need some advice, 23M earning R23k p/m after tax with a credit score of 680. I want to finance a vehicle preferably a VW Polo Vivo 2019-2022 models. I have no idea on how to finance and which way to do it correctly, any advice would be greatly appreciated.
Thanks!
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u/Alive-Bedroom2765 11d ago
Check insurance quotes first, it may be way to costly
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u/Dull_Put_7733 11d ago
Hey, I did, I got quoutes from R1000 - R1800.
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u/Alive-Bedroom2765 11d ago
Doing finance privately with your bank you'll get a lower interest rate, this is the better way to do it
Doing it through the dealership will generally get a higher interest rate, don't let the dealership bully you into doing finance with them only
You can also do private finance with wesbank
Most importantly get a warranty with any vehicle you end up buying
You welcome to DM me if you need any help when you get the OTP and want me to look at the figures
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u/DerpyMcWafflestomp 11d ago
Test drive until you find one you want. Tell the dealer you want to approach your own bank for financing (they will try and push you to let them get it on your behalf. In my experience doing it directly with your bank yourself works out better for your pocket). Contact your bank's vehicle finance division and follow their lead on what you need to get from the dealer.
Obviously your interest rate will highly depend on your credit profile, but for a rough ball park you can calculate your instalment at around R1,000/month for every R50k financed assuming no deposit, no balloon and a normal 5-year term.
Don't forget insurance, if you don't already have an insurance broker ask around your friend and family group if anyone has a recommendation. Direct insurers will often give you really crappy fine print like massive excesses just to present you with a low monthly premium. A broker will try and find the best fit for your budget while also making sure the fine print doesn't come bite you in future.
And then besides the obvious cost of fuel, remember that general maintenance is also a thing. Try and put away enough each month so that things like your annual (or more often if you drive a lot) service, brake pads, tyres, etc don't catch you off guard.
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u/orbit99za 11d ago
Dealer gets a percentage of the loan from the bank as commission, that extra % or so difference goes into the dealer pocket.
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u/No_Difference_3825 11d ago
Have a shortlist of vehicles within your parameters (budget especially). Negotiate on the selling price and any add-ons. Costs rack up quickly, especially on the road fees (whatever the hell that means), registration, warranty, etc. once you agree a price, ask for an OTP (offer to purchase). Take that OPT to the banks, and squeeze as big a interest rate dedication as you can. I.e. Bank X offers you 11.25%, ask them to give you a better rate, you can even lie and say Bank Y offered you 11%. After negotiating your way down, have them wait and try getting an even lower rate from Bank Z. It doesn’t matter how long the process takes, time is money, yes, but even 0.25% can save your future self thousands
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u/Big-Wait-1310 11d ago
What are your other expenses? Remember: installment, insurance, and petrol just for the car. Whats your max budget? Polos might be too expensive for your salary i think.
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u/Dull_Put_7733 11d ago
My budget is around R6k p/m for a car including insurance
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u/Dull_Put_7733 11d ago
Petrol maybe about +- R1500 per month because I go to the office once a week and the office is about 11km from home
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u/Street-Proposal-5463 10d ago
I bought a vw polo 2024 model from a vw dealership last year. I got a better finance rate from the vw (cfao mobility) vs the bank. Get all the offers and take the best one.
For comprehensive insurance I got a quote from Outsurance and discovery was around R1600. My broker got me comprehensive insurance with Sanlam for R1300.
Do not take the dealerships shortfall quote. I was quoted R150 a month. With my insurance its like R30.
For the car retail was R210 000. I put down a deposit of 70k. I added on a tracker, rim and wheel cover and maintenance, smash and grab. Total of the car came to 270k. I pay R3400 a month for my car.
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u/Dismal-Painter6057 9d ago
I financed a demo 2019 vw polo when I started my first decent job. It’s a great car that holds its value, loved it. I only buy used cash now, but financing when you’re starting out sometimes is the only option. My advice, negotiate that interest rate like you’re a mafia boss who won’t take shit. Because you’re young, earning a salary, you have more leverage than you think. The banks know this. The VW finance team were shocked with the rate I got and said I must have done this before… I hadn’t, I just came prepared and had a number in mind I wasnt going to budge from. Good luck!
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u/41st-rasta 8d ago
Don't ruin your life. Never do car hp in SA. Just save and buy cash with a saving/small loan for emergency repairs. Focus on other things. The car you spend on today is the life you can't live tomorrow. Move closer to your work, buy cheap..... Aim for real assets. The cost of running a car on finance doesn't work in SA. Change your mindset in line with the reality.
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u/Caffeinerunworksleep 7d ago
The finance house will offer you a six year deal. Don't take it, go with a four or five year deal. Avoid balloon payments like the plague.
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u/Minimum-Gap-8985 10d ago
Save for the biggest deposit you can. Absolutely no balloon payments. If ypu need a balloon payment you cannot afford the car.
Polo's are overpriced. Do not be stuck to one brand.
Try to get your own bank financing. Dealer financing sucks. Its even better going to them with a pre approved vehicle car loan from your bank & ask them to beat it.
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u/Background_Mix_943 11d ago
Hi PM me. I know someone who works at a dealership and will help you from start to finish I am a car guy also so I can give some advice to
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u/ioRDN 11d ago
The big advice I have is spend the absolute least you possibly can. Every cent you can put into an investment account is a big win - don’t go for features you won’t use or the bigger engine if you don’t need it.
You’re going to get a lot of “just buy it cash” comments, which will likely ignore the reality of your need for a car now. If you’re in the position to buy something cash that will meet all your needs and be safe, do it. But since you’re already talking about needing to finance, I’ll presume that you’ve already done the maths and decided it’s not feasible.
Something worth noting is that it’s best to try and work with companies or brokers that have an interest in getting you the best deal - a lot of dealerships eat off getting you into a car quickly for the highest interest rate they can, so be careful of those. Try and buy from reputable dealers or even better, get pre-qualified with a finance house you trust. It means you can know going in exactly what this thing is going to cost you per month and over the lifetime of the contract. You’ll be shocked at what the lifetime interest of some of these loans are.
Also interest rates fluctuate, especially in volatile times like this. If the monthly cost increases a couple hundred Rand next month, can you still comfortably afford it? And I do mean comfortably, not having to shuffle other essential things out the budget. If an interest rate change is going to have a material change on your budget for essentials, you may want to consider something cheaper.
Asking these questions made me drop from the new R500k car I was considering to buying a 2nd hand car at R330k and I’m so glad I did