For most people, when they hear the word “loan”, they immediately think about being tied to debt and wasting money on interest. However, when chosen correctly, a vehicle loan can help you achieve and acquire things that bring you happiness and make your life easier. Sadly, with South Africa’s economy, only a small minority of people can afford the life they want without needing financial assistance. The cost of living continues to increase and create a wider gap from the things we need in today’s world. Those things include a vehicle, home and day to day necessities.
If you have been wishing to have a vehicle of your own, but have been contemplating whether getting a loan is wise, continue reading.
You can purchase your dream vehicle
Everyone has their dream car that they wish they’d own. Whether you see it on the road driven by someone else or when you browse vehicles online, you know which vehicle you want. The type of vehicle that will bring you happiness whenever you drive it. Well, most of the time, the one thing standing in your way is the cost. But, with a vehicle loan, you could get the vehicle of your dreams at an affordable monthly payment. You don’t have to wait till you can save so much money or simply accept it’s a dream that you cannot make a reality. You can ensure that it is fully paid for and all you have to do is ensure you meet your monthly payment. If you meet your instalment, you won’t have anyone hounding you, and you can simply enjoy the pleasure of owning a vehicle you truly love. As long as the monthly repayments are within your budget and you’re still able to do your day to day activities and cover expenses, nothing is stopping you from owning it.
You can save money
When people think about getting car finance in South Africa, they often assume that you will waste money in the long run. And while you will pay interest and fees on your loan term, that doesn’t mean you can’t save as well. Paying a large sum of money you’ve saved for a vehicle may not be the wisest decision. Depending on your responsibilities and how much you earn, most of your savings will go towards the vehicle. Once you purchase the vehicle, you’re left with zero to little savings. Even if you plan on selling the car in the future, you won’t get that money back due to depreciation. This leaves you in a difficult position should anything happen that requires savings on hand, such as medical fees or having a partner or parent unemployed and financially dependent on you. With vehicle finance, you can buy a car and still have your savings safely available for any unforeseen expenses. Instead, you can pay a large deposit that can help lower your car loan. That will lower your debt but also ensure that you have money available for anything. And while you’re paying your monthly loan, you can continue growing your savings.
No need for collateral
When it comes to car finance requirements, collateral isn’t one of them. This is because a vehicle becomes collateral should you fail to make your monthly payments. So, you won’t have to worry about losing any of your assets while also ensuring you stick to your end of the agreement. This becomes a win-win for both parties involved. If putting your home or other assets up as collateral was a reason you weren’t interested in applying for vehicle financing, you have nothing to worry about as long as you pay.
Affordable interest rates
Just because you’re buying a vehicle on credit doesn’t mean you have to rack up high-interest rates. Lenders offer competitive rates, and you can choose the repayment term that works best for you and your financial situation. If you have a good credit score, you can also negotiate with the lender for a better interest rate as your score gives you negotiating power.
Helps build your credit score
If you’re trying to build a credit score, this finance option can help you achieve that. Because this loan runs over a long period and you make payments every month, your credit will improve significantly. A major factor that helps your credit score improve is your credit history. Your credit history is how long you have had credit. While it may seem insignificant to you, it helps give lenders an idea of how you are with credit. It will show them that you can stick to a loan agreement, that you make your payments on time and that you aren’t a credit risk. This helps you in the long run when you wish to get a home loan or start a business and need business financing. Paying for everything in cash stops you from having that advantage or even improving your score.
You’ll insure your vehicle
Car insurance can be a touchy subject, and many car drivers are under the impression that they don’t need it. This is because they feel they’ve been driving for years and know how to be safe on the road. And while this may be true, you aren’t the only one on the road. Therefore, you’re not the only one who can potentially cause an accident. Besides, it’s not just car accidents you need to be worried about as theft is also a major issue. With car financing, you are required to have car insurance to get funding. This can help push you to get insurance for your vehicle and help you save money if something happens to the vehicle in the long run.
Car loans get a bad reputation as a way of getting people into a prolonged debt trap. But, this doesn’t have to be the case. Available credit is supposed to help people improve your life in one way or the other. Lenders have competitive interest rates and fees, and all one needs to do is find the right one. They even have vehicle finance apps that help you get all the information you need in the comfort of your home. As long as you have done your research, budgeted and know what you are getting yourself into, there is no reason why you shouldn’t apply for vehicle finance and own your own vehicle.