Not many people have a large lump of cash to pay for a car, which is why the majority of us have to take finance. This can be every expensive if you are not careful, so what can you do to help keep the costs down?


Once you’re certain of the value of your car, and you have had a Vehicle Verification Report, it’s time to look at the different finance options.


The first thing to remember is dealers make money by you having finance with them, so never tell them from the start if you are a cash purchaser. Leave that bombshell till the deal is done, as they will be more flexible on the price if they presume you’re going to have finance.


If you have equity in your property, you should consider borrowing the money you need against it. It’s the cheapest way of financing anything.


If you take the car company’s finance you will pay monthly instalments, and the longer the term of the agreement the more interest you will pay. Scrutinise the deal they are offering, don’t just take the dealers word it’s the best. The car legally becomes yours after the last payment has been made.


You could keep the monthly cost down by opting for a ‘balloon’ payment. This means you pay a smaller amount each month, but then have to settle the finance with one large payment at the end. This is one of the dearest financing options, as most people end up having to borrow the ‘balloon’ if they wish to keep the car.


Leasing a vehicle is a fairly new concept in South Africa, but it gives you the choice of using the car without actually owning it. With most leases you get a new car every couple of years, which is one of the reasons more people are financing this way.

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