/ 27 November 2008

How to afford your car

  • Talk to your bank before you find yourself in a situation where you are defaulting. Absa has opened a Debt Repair Line to help customers become financially fit again. The Debt Repair Line is 0860356356.
  • Consider downgrading your vehicle. Go to a bank-approved dealer to establish a trade-in value or negotiate the sale of your vehicle.
  • Remember, skipping a payment or defaulting in any way affects your credit record and reflects badly on how you apply for finance in future.
  • Don’t cancel your insurance on vehicles. You could find yourself in a situation where your car is stolen and you are still liable for the payment. This is relevant in the case of an accident or mechanical failure because you will not be able to pay for repairs. This could cause you to fall into arrears on the vehicle repayments and face possible repossession.
  • If you are looking at buying a new vehicle, take into consideration the effects of future inflation. Make sure you can comfortably afford the vehicle. If you can just make payments now, you may not be able to if interest rates go up in future.
  • Examine any proposed financing option carefully before putting pen to paper. Pay particular attention to the risks of the financing mechanism as the monthly instalment amount is not the only factor to consider in your decision.
  • Budget for future interest rate hikes. Include insurance, petrol and maintenance costs as part of this.
  • Consider fixing your interest rates to budget and plan for the future.
  • Never hand your car to other parties to take over payments without checking first with your bank or legally changing ownership. Otherwise, you are still legally obliged to pay for the vehicle even if its not in your possession.
  • Additional expenses are often not considered when people buy vehicles. Taking into consideration increasing theft, hijackings and accidents, insurance premiums are expected to rise.
  • Customers have to consider if they can afford their insurance premiums. They may find their short-term insurance premiums are as high as vehicle payments. When buying a vehicle, be sure to check what is included in the price.
  • Specifications or extras that may have been standard may now be an additional cost — this can include motor plans and warranties. Check and discuss this carefully with the dealer before signing.
  • Make sure that you deal with authorised dealers and reputable manufacturers to avoid being a victim of fraud, which has been on the increase.