The majority of South African drivers cannot afford to buy their cars outright and rely on vehicle finance from banks. There are a few different vehicle finance options available to customers, namely:
- Balloon Payments
- Installment Finance
- Guaranteed Future Value
But how do you know which one is best for you? To help you make better-informed decisions, here is what you ought to know about Instalment Finance.
Instalment finance agreements come with fewer restrictions such as mileage and the condition of the vehicle, but monthly repayments will naturally be a bit more.– GHANA MSIBI, CEO OF WESBANK MOTOR DIVISION
Instalment sales are by far the most common and simplest of the vehicle finance options.
Monthly repayments are calculated on the purchase price of a car, and payment terms can be structured into time frames of between one and six years. The longer the term, the lower the monthly instalment will be, but it’s important to remember that interest will increase proportionally to the length of the contract. As such, the total amount repaid to the bank will be more for a longer loan period than a shorter one.
“Instalment finance agreements come with fewer restrictions such as mileage and the condition of the vehicle, but monthly repayments will naturally be a bit more. The extra monthly cost does, however, pay off in the long run because once the payment term is concluded, the customer owns the car outright,” explains Msibi.
One of the most important pieces of advice WesBank has for customers, regardless of which of the three finance options is chosen, is to begin with a healthy deposit. Any money put down upfront will automatically mean lower monthly instalments and less interest, combined with a lower outstanding balance at the end of the contract in the case of balloon payments or GFV deals.
“Any dealership that offers finance through WesBank has a registered Finance and Insurance (F&I*) consultant to guide buyers and explain the different finance options,” concludes Msibi. “These experts can propose which option is most suitable for each respective customer and will offer financially sound advice on what you can and cannot afford,” says Msibi.
* All F&I consultants are regulated by the Financial Advisory and Intermediary Services (FAIS) Act and the National Credit Act (NCA).