You’ll pay lower monthly instalments, but you are required to pay a larger amount in a lump sum at the end of the payment term. If you don’t have a sizeable deposit, you might choose a balloon payment option, also known as residual. A longer term means you’ll end up paying more interest overall, but it does make the loan more affordable. The term of your loan is also a factor – if you’re paying an amount off over 12 months, the instalments will be much higher than those required to pay off a 72-month loan. You could save up for a few months until you have a sizeable deposit, so that you need a smaller loan with smaller monthly instalments. There are ways to make repayments more affordable if your disposable income isn’t quite enough to cover a loan to buy your dream car. You can check your credit score for free and learn ways to keep it at a satisfactory level with our credit score tool on the Money app. If you’ve managed debt responsibly in the past, you stand a better chance of having your loan application approved for the amount you need. You can make these calculations easier by using the MFC Budget Calculator and the MFC Instalment Calculator.īrowsing online can help you see all the options nearbyĪlong with affordability, your credit score is another factor that influences the loan amount you may qualify for. You need to calculate all these costs when you’re working out affordability, which determines the size of the loan you may qualify for, and therefore the sort of car you can afford. From that disposable income, you will need to be able to pay the vehicle loan instalments, compulsory insurance premiums, fuel costs, licensing fees, and the maintenance costs to keep the car in safe working condition. If you subtract all your monthly living expenses from your after-tax income, what remains is your disposable income. First, you need to consider affordability. MFC provides an online step-by-step guide to finding the right vehicle and financing it. How MFC makes the vehicle-buying process simpler You can learn more about the products and services that MFC offers via Online Banking, on the Money app, or when you’re browsing for cars on Avo Auto. Used-car financing, however, is conditional on the vehicle being less than 10 years old and worth at least R50 000. MFC, a division of Nedbank, works with a range of accredited dealers to ensure that buyers get cars that suit their needs – and MFC vehicle loans can be granted on both new and used cars. Although you get full use of the car and can register it in your name, it remains the property of the bank until the loan is fully repaid. The longer the term of the loan, the more interest you will pay in total. The bank pays the dealer in full on your behalf, then you pay back the loan with interest in monthly instalments over an agreed term – usually between 12 and 72 months, although it can be longer in certain cases. Vehicle finance is a loan you take out to buy a car. However, if you have permanent employment and a good credit score, vehicle finance from a bank allows you to buy and drive that car now – and maybe increase your income – instead of waiting till you’ve saved enough to pay cash upfront. To afford a car, you might choose to save up for years. Ensure your estate is managed by an executor | Nedbankīuying a car is a huge step but the process doesn’t need to be intimidating or confusing.
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