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How can I increase my chances of getting a car loan? 24.05.2021

How can I increase my chances of getting a car loan?

Most South Africans can’t afford to buy a car out of pocket and may need a car loan to solve their transportation problems. If you’re one of the people who’s planning to apply for a car loan, you may be wondering how to increase the chances of approval. Don’t worry, and keep reading – we’ve got you covered with these top tips. 

Top tips that increase the chances of getting approved for a car loan

First of all, you should know there’s never a guarantee you’ll get a loan. But that also doesn’t mean it’s up to luck. Most lenders have a list of things they look for before saying yes to your application. That being so, here are some smart moves that will help you become a more attractive borrower:

Choose an affordable loan amount

The National Credit Act requires banks and other lenders to only give out loans to people who can afford them. This is called responsible lending, and you need to prove you’re a responsible borrower before getting approved. 

That means you should at least calculate your budget to see how much extra cash is left for loan instalments after paying your monthly living expenses. Don’t forget to factor in insurance, fuel, and maintenance costs when figuring out your budget. It’s also best to use a vehicle finance calculator to find an affordable monthly repayment estimate. 

Make sure you qualify

Generally, South African lenders have the following requirements:

  • Good credit score – This reduces the lender’s risk since it shows you’re good at paying back your debts on time.
  • Regular source of income – Having a steady income shows you can afford the loan.
  • Documents – You’ll have to provide recent payslips, bank statements, your ID, driver’s licence, and proof of residence. You may also need to provide a vehicle purchase agreement from the seller. 
  • Other requirements – You must be at least 18 years old and a South African citizen or someone with a residence permit.

Put down a deposit or trade-in

A deposit is not always a must, but it means you borrow less. This reduces your monthly repayments, making the loan more affordable. As mentioned earlier, a lender will only approve you if they think you can afford the loan. A trade-in also helps you borrow less because it’s like a swap and top-up. 

Since your old car has some value, you’ll borrow a smaller amount for the top-up instead of borrowing the whole amount needed for the new vehicle. For instance, if your new car costs R80 000, and you trade in your old car for R30 000, you now only have to borrow R50 000 instead of the full R80K. 

Consider a co-signed loan or joint application

If you’re unable to qualify for a loan, for some reason, adding a co-signer to your application can help. However, the co-signer must meet the lender’s financial requirements and agree to pay for your loan if you fail to do so. 

If you qualify for the loan but feel the need to strengthen your application, you can try a joint application. This is when you apply with someone you trust, such as your partner or close family member. You must both qualify, and you’ll both be responsible for paying off the loan.

Give your credit score a boost

Here’s a quick list of things you can do to improve your credit score:

  • Check your credit report and fix any errors
  • Pay off some of your debts
  • Make sure you pay your other bills on time
  • While at it, avoid submitting too many loan applications in a short space of time

Can you get approved for a car loan with bad credit?

Yes, it’s possible to get a car loan with bad credit. Since most lenders offer secured car loans, the lender’s risk is a bit lower, so they’re willing to provide you with credit even when your rating is not so perfect. In any case, if your worry is not qualifying because of bad credit, using the tips above still works to help you secure the loan you need. 


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