A Beginner's Guide to Getting Your First Car Loan

Are you tired of catching taxis or walking for ages to get to the Gautrain? In South Africa, you can’t really be free to move about until you have your own car. That’s when life really opens up.

Thankfully, getting a car loan is not as difficult as it might seem. In fact, if you’re ready to take the plunge, you can apply for car financing via Digi Cars Group right now. All you need to do is upload a few key documents, and you’re good to go. 

This guide is here to answer some common questions about the buying process so you understand the fundamentals and feel like you can move forward with confidence.

What Car Can You Afford?

If you want to know what kind of car you can reasonably afford to buy, you should start by reviewing your monthly income and contrasting this with your fixed costs. With a clear budget, you can calculate how much you can realistically set aside for repayments without straining your finances too much. 

There are plenty of online car loan calculators that can help you do this efficiently, factoring in things like interest and inflation to show you what kinds of loan amounts you might qualify for based on your income. 

Just remember that buying a car is not just a matter of working out loan repayments. You will also want to factor in extra monthly expenses like insurance and fuel.

What Documents Do You Need?

To apply, you’ll need to gather your South African ID or passport and your driver's licence first. Then, collect three months' worth of payslips to prove your income, along with bank statements from the same period to prove that you have enough disposable income to afford the loan. 

You’ll also need to provide proof of address that dates back no more than three months. 

Having these items ready and prepared will significantly speed up your finance application and prevent any delays.

How Will Your Credit History Affect Loan Approval?

Lenders will check your credit score to decide on approval and interest rates, and yes, your credit record can make a pretty big difference. 

If your record shows a history of timely payments on past accounts, you’ll be offered lower interest rates and better terms. On the other hand, if your credit score is poor, you’ll have a harder time getting approved without high interest rates, since you’ll be perceived as a higher-risk customer. 

If you’re not sure where you stand, you can request a free credit report once a year. It’s a good idea to do this before applying for a car loan so you can spot any issues and correct them beforehand.

What Loan Options Might Suit You Best?

Typically, car finance options range from four to six years. The length of the repayment period will impact how much you need to pay back every month. A shorter term will mean higher monthly payments but less interest overall, while longer terms will mean lower monthly payments but more interest in the long run. 

If you have some savings, an upfront deposit can reduce the overall cost of the loan, as it reduces the total borrowed amount on which you pay interest.

Are you ready to buy your first car? Digi Cars Group makes it easy! Apply for a competitive car loan via our website right now.