A Smart Approach To Vehicle Finance

February 17, 2022
Posted by: Edrich John Pretorius

One of the most stressful aspects of buying a car is: can I afford this purchase? We all have dream cars – for some, it’s a sports car, for others it’s a 4×4, and maybe some people want a vehicle for their business.

Obtaining car finance in South Africa shouldn’t be that challenging, as long as you’ve ensured that you make yourself look as credible and reliable as possible to the financial institutions.

But not all of us can afford the car of our dreams right now, and so it’s important that each of us understands what our budget constraints are, and whether the new car affordability is realistic and if we can truly afford it without going bust!


Looking to finance your next used car ? At Cape Bakkie Centre, we can assist you with your full application. We take care of all the paperwork

Apply Online Today!

  • We will not waste your time
  • We assist with all the paperwork
  • Obligation Free
  • It’s quick and easy to apply online

Start with an affordability calculator

Many of our customers are selling or trading in their used car so that they can purchase a another car, so Stander Motors have made sure we have an Affordability Calculator readily available on our website.Potential buyers can easily work out how much they can afford to repay on car instalments each month (this will always be just an estimation)


  • Personal Loan
  • Hire Purchase
  • Leasing
  • Guarantor Loan
  • Rent To Own

Factors to consider when calculating your car affordability budget

When trying to determine whether or not one can afford a car or vehicle finance, you generally shouldn’t plan on spending more than 15% of your monthly income on car loan repayments. There are a number of other factors to consider when calculating your car affordability budget:

1. Major expenses

The first step is to subtract your monthly expenses from your monthly income to determine the money you actually have leftover per month to spend on vehicle finance repayments. Consider which are your most important living expenses. These can include:

  • Bond/rent
  • Insurance policies
  • Medical aid
  • Education
  • Personal loans
  • Vital groceries
  • Compulsory levies
  • Rates (water, electricity)

2. Vehicle Finance options

There are a number of different contracts available when getting your vehicle finance in order. Most include the paying of a deposit. A deposit is an initial amount that can be paid to avoid high car loan repayments, but it’s not always required. There is no minimum cash deposit when buying a used car, according to the National Credit Act, however putting down a deposit on used car means you’ll pay less towards your monthly vehicle finance repayments, saving you money on a month-to-month basis. Some vehicle finance options include:

  • Personal Contract Purchase (PCP) – an initial deposit on the vehicle finance, as well as fixed loan instalments for your vehicle repayment.
  • Leasing – an upfront deposit and an agreed-upon fixed monthly car rental payments.
  • Balloon payment – a lump sum payment to the bank at the end of the monthly car loan repayment term.
  • Trading-in – dealers reduce the profit on the new car and allocates it as a ‘discount’ to the amount offered for your trade-in.
  • Hire Purchase (HP) – initial deposit on the vehicle finance, as well as a fixed monthly car payment.
  • Personal Loan – borrowing a lump sum over a fixed term for the purpose of buying a car.
  • Guarantor Loan – a third party who, if you fail to maintain the monthly vehicle repayments, will be forced to make the monthly car loan payments.

3. Economic fluctuations

Due to South Africa’s economic fluctuations, there are a number of factors which need to be considered when determining your car affordability:

  • Make sure you leave a ‘buffer’ of spare cash leftover once you’ve paid your major expenses. If you can’t, consider dropping more unnecessary expenses.
  • Economic changes may result in increasing petrol price, security, insurance and maintenance costs.
  • If for whatever reason you’re struggling with your car loan repayments, contact your finance institution or lender to restructure your car loan instalment contract.

4. Legal implications of buying a car

As a car buyer, you have a number of responsibilities, which include:

  • Paying the required deposit.
  • Paying the monthly vehicle finance instalments.
  • Being available for the vehicle’s delivery.
  • Until the car is paid off, it belongs to whatever financial institution has provided you with the loan. This means that until the final car finance instalment on the credit agreement has been paid, it is your responsibility to keep the car in good condition by having it serviced regularly

If you fail to pay your monthly car finance instalments, the finance company is within its rights to:

  • Cancel the contract agreement
  • Repossess the car
  • Claim damages from you
  • Sue you for the arrears

5. Getting covered

A car being financed through a finance company must receive the necessary insurance coverage. Failing to pay your car’s insurance premiums can result in your insurance policy being cancelled.

To Conclude

If you’re looking to sell your car for a much better price cash or trade-in your financed car, or perhaps you’re thinking about buying a car on finance, either way, Cape Bakkie Centre’s Vehicle Finance Calculator is the perfect solution to get a fait estimate on what you monthly instalment would be, excluding other extra fees.

Another smart way to approach the buy of a used car, is to first apply for vehicle finance to get a pre-approval. That way, you will know your numbers and affordability- no surprises! | GET YOUR FREE PRE-APPROVAL TODAY