Car dealers with in-house financing in South Africa
You can shop for your car and your car loan under one roof when you visit a dealership that offers in-house financing. Find out how this “one-stop-shop” finance option works and whether it will get you the best deal when you buy your dream car.
Car dealers with in-house financing – How does it work?
This type of finance option is often called buy-here, pay-here because you can get a loan directly from the car dealership. The dealer either finances the car on their own or works with a credit provider to arrange finance for you.
Offers from car dealerships that have in-house financing might have the following features:
- Inbuilt insurance that provides cover in case of theft or accidents;
- No credit checks as long as the dealership can verify that you’ll be able to afford the monthly payments;
- A deposit is usually required; and
- You can buy a new or used/pre-owned car.
What happens when you visit a car dealer with in-house financing?
Most car dealers that have in-house financing have a variation of the following process once you walk in through the door:
- Viewing cars available in the showroom to narrow your options;
- Going for a few test drives before making the final decision;
- Learning the details of the finance options on offer including monthly payments, as well as other terms and conditions;
- Applying for finance, insurance, and other vehicle plans; and
- Driving your car away once your application is approved.
Advantages of dealership in-house dealership finance
- Bad-credit financing. A viable option for borrowers who are blacklisted and who have met with rejected applications from traditional lenders.
- Saves you time and effort. Since you don’t have to search for a loan or handle paperwork, the application and approval process is typically faster. That means you get to drive your car sooner.
- Promotional deals and specials. Most dealerships offer important and valuable add-ons like extended warranties and service plans that are affordable.
- More negotiating power. When you visit the car dealership, you have the opportunity to explain your financial situation and negotiate for better repayment terms and a rate that’s comfortable for you.
Disadvantages of dealership in-house dealership finance
- More costly. Might have higher interest rates than traditional lenders such as banks and credit unions.
- Limited options. When buying a car, your choice is limited to what the dealer has in stock, so you might not get the vehicle you want.
- Unnecessary add-ons and services. If you’re not careful, your loan’s total cost might end up higher if you accept all motor plans or add-ons the dealership pushes towards you.
What you need to apply
When you visit a car dealer to apply for in-house financing, you might have to meet the following general requirements :
- Be 18 years or older;
- Have a driver’s licence;
- Have a valid South African ID;
- 3 months bank statements;
- 3 latest payslips; and
- Proof of residence.
Dealership finance vs. vehicle finance from traditional lenders
While you’re considering vehicle finance options in South Africa, you may also want to look into traditional car loans which have their own advantages. For example, you might be able to apply online, and you’re likely to get a lower interest rate.
Frequently asked questions about car dealers with in-house financing
Can I get 0% financing from a car dealership?
You might be able to find South African dealerships that offer 0% financing deals but make sure the purchase price of the car is not too high compared to the market value.
Can I get a trade-in deal from a car dealership?
It depends on the car dealership. Dealerships that accept trade-ins will typically evaluate your car before offering you a market-related price.
Can I get refinancing from a car dealership?
Some dealerships offer car loan refinancing where your existing loan is paid off with a new loan. This enables you to restructure the loan so you can get better and more comfortable terms.
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