Guide to Private Car Finance in South Africa

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kingr
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Guide to Private Car Finance in South Africa

Post by kingr »

Many South Africans remain unaware that the old days of cash-in-hand when buying a private car as the only option are long gone. Wesbank, ABSA and most banks nowadays will finance a private sale, assuming the usual criteria for financing are met.

Buyers aren’t limited to having to put a pile of cash together or shop exclusively at dealerships, where financing thrives. Now any two parties can have a private car sale financed by legacy institutions.

If you decide that private finance is for you, read our Guide To Buying A Private CarG, and get valuations on cars that interest you. Thus armed, it becomes easier to narrow things down to the best option. When you’ve decided on a sale car that meets the minimum requirements of the finance house, things become fairly predictable. One thing that car financers are good at is financing cars, and they have made the process as logical and simple as possible. Since erroneous listing can happen to anyone, it’s a good idea to find out if you are blacklisted in any way before applying for finance. It's still possible to buy a car even if you are blacklisted. There are a few basic requirements that apply pretty much across the board, no matter which bank or finance house finances a private sale.

In a nutshell, buyers should:

1. Identify as a South African citizen or permanent resident, 18 years or older.
2. Have a valid SA driver’s licence.
3. Earn a minimum of R6250/month and have a clear credit record (not blacklisted).
4. Provide three months’ bank statements.
5. Supply their three latest payslips.
6. Be buying a car not older than 20 years and the car’s value should not be less than R30,000.
7. Engage their preferred financing house to confirm eligibility and the details required of the transaction, while also then passing on all relevant car details to the bank, in order to get the ball rolling.

The seller has to:

1. Contact the buyer’s financer, and identify as the seller, to confirm what the bank needs them to do to facilitate the sale..
2. Typically, the seller will then have to make sure that the car receives a technical inspection and roadworthy test at an approved testing station.
3. Send all needed documents through to the bank, who will instruct the seller as to what documents are needed.
4. Remove personalised number plates.
5. Ensure that any outstanding licence fees or traffic fines are settled.

Getting car finance rolling

Having chosen your preferred financer, call or mail and ask for their requirements to be mailed to you, so that you have every point itemised, from the horse’s mouth as it were.

Most sellers are happy to perform the few tasks required by bank finance. Firstly, they would probably have to perform them anyway, or ideally would do so if they’re selling a clean, legit car. Secondly, knowing that their buyer is approved for finance makes the deal more professional and assured, hence there is peace of mind for both parties when availing yourself of private finance. There really is no difference between financing a car at a dealership and one from a private individual, at least as far as legal transactions go. The same criteria apply and the same process is involved.

Whereas when buying from a dealership, they will run around and take care of all aspects to ensure a smooth sale, the difference with private finance is simply that you and the seller have to do those tasks yourselves. They are not a tremendous burden, however, and also being intimately involved with all aspects of the process allows for a greater sense of surety and satisfaction too. Savvy buyers might even accompany the seller to the testing station, as it gives them the chance to view the car far more extensively while it drives and is subjected to testing by competent authorities.

You’ll feel like you know the banker personally by the time you’re finished with all the phone calls and back and forth, but that’s also mostly a positive experience. The process is quick enough - especially if you have a wake-seller seller in the deal who has the time and willingness to wrap up the car inspection promptly. Indeed, if both you and the seller sort out the inspection and possible outstanding fees and fines prior to sale day, a private finance deal can be wrapped up in an afternoon, just like walking into a dealership and driving home.

But don’t roll over these...

1. When you’re satisfied that you’re going to buy a car, liaise with the bank together with the seller. Some buyers even enjoy going along for the vehicle inspection, assuming the seller is open to it.

2. The stipulations listed above are Wesbank and ABSA terms, but they hold for most financial institutions who fund private car sales. Also, shop around. Don’t be afraid to shop around for a better financing deal as sometimes the difference is very worthwhile. On the road costs should be vastly reduced or absent in private sale financing, as you and the seller are taking care of many items covered under this heading.

3. Assuming the necessary requirements are fulfilled by both seller and buyer, private financing of a car sale is available, and can make all the difference when shopping for a car. The ability to obtain bank finance on a private car sale means that now, as long as you qualify for finance, every sale car in the country of a certain minimum age and condition is available to car shoppers. Of course, dealership showrooms are full of the glitzy options, but now South Africans can add every private offer to the shopping list potential if they so wish.

4. Lastly, be aware of our nature as fickle human beings. Buying a car is not a quick nip into Woolies to pick up a food item. It takes a few hours and a commitment to getting things done properly, for a moment in time. Although we as consumers immediately take any service or facility as the new standard as soon as it lands, don’t grumble about having to get some admin and testing in order, things third parties normally handle for you, the consumer. You’ll probably drive that car for years, so a few hours at the outset making the purchase a correct and complete one is really not a big ask. Buyers, don’t try to palm off your obligations in the deal to sellers. Sellers likewise, make the effort to fulfill the testing and other minor requirements, and everything else thereafter is pretty much plain sailing.
Kurt #3337

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