You can buy a car in South Africa with a low credit score, as there are different financing options. You would find diverse lenders with varying eligibility criteria for the loan agreement.
If you want to apply for an auto loan, determine your credit score, which represents your creditworthiness. Banks or retail stores evaluate the personality of a person’s finances based on the analysis of their credit behavior. A good credit score usually ranges from 681 to 766. If the score is low, it implies the risk of lending money.
So, let’s learn about the different benchmarks laid out by lenders in South Africa.
The required credit score to buy a car
The minimum credit score to buy a car in South Africa is approximately 600, and this value differs from one lender to another. If your score stays in this range for long, it indicates a high threat to the lender. In this position, you can still buy a car but have to pay a higher interest rate or a more significant down payment.
If your credit score is between 681 and 766, based on the scoring model of 0 to 999, you are highly eligible to get a loan. The higher the score, the more likely you will get loan approval and, within a, you will get a promising interest rate.
How to get a car with a low credit score?
If you have a low credit score, then here are the options that you can reach out to:
- Save for a down payment
You may have to pay the money upfront, more than what you borrowed. So, always start saving money for the down payment. It reduces the risk of the lender and also has a positive effect on your credit score.
- Get a co-signer
If you have a trusted friend or family member with an excellent credit score, you can get them as a co-signer for your car loan. Their creditworthiness will be checked for your loan approval.
- Go for better deals
When looking for financing offers, consider the first one. Various lenders have different criteria, such as credit unions, online lenders, and specialized car finance companies. You might find more lenient terms based on your bad credit car finance than traditional banks.
- Go for an affordable vehicle
When you choose affordable vehicles, you need less finances and have a higher chance of getting approved. You can start by reducing the monthly repayments, giving you time to work on your credit score.
- Consider high-risk lender
Some lenders work with subprime borrowers with an audit history or low credit scores. These loans have higher interest rates along with additional fees. But, if you cannot cope with the budget of the finances, there might be better options to buy a car.
Summing it up:
Always negotiate the terms when taking a car loan. This will help you get the best payment method and reduce the interest rate. Consult with https://www.swiftbanker.co.za/ for a short-term loan, a better option than car financing.
