The cost of living has and is consistently increasing and for most consumers, keeping their heads above water, is a daily challenge.
Many cannot survive without using credit to finance cars and housing and as we all know, transport is a critical element in terms of being economically active.
“While there’s no guarantee that a customer’s application will be approved, there are best practices to follow that can improve one’s credit health and greatly increase the chances of being granted credit,” says Lebogang Gaoaketse, WesBank head of marketing and communication.
• Determine your disposable income by subtracting all your monthly expenses (food, insurance, electricity, water and so forth) from your nett salary. This nett figure will then provide an indication as to how much you have available for luxury expenditure e.g. vehicle financing. Wesbank’ affordability calculator will make this process seamless so download the Wesbank App.
• It is extremely important though to remember to include expenses such as fuel and maintenance costs as part of your vehicle expense budget.
• Having a deposit available when buying a car, will count in your favour when your application is assessed by the financial services provider.
• “Settle as many debts as possible,” says Wesbank. “According to the NCA there are two main types of credit agreements. The first is a credit transaction such as a personal loan, which is taken out and paid off, with interest, over a certain period. With each payment, the outstanding balance reduces over the agreed loan period. The second type of credit agreement is a credit facility such as an overdraft or a credit card. These are revolving facilities with a maximum amount but also require a monthly repayment of an agreed amount.”
Although it is important to have as little debt as possible, good debt management does have its advantages. Once you have settled an account, close it advises Wesbank.
“One other thing to consider if you own a vehicle is trading in your existing car. If you’ve had your current car for more than four years, chances are that its trade-in value will be more than the money you still owe the bank. This means you’ve passed the break-even point for your vehicle loan. It also means that the money you make from trading in your car can be used as a deposit towards your new vehicle purchase. The same is true if your car is paid off: the money you receive from that trade-in deal can be put down as a substantial deposit on the cost of your new car.”
After a thorough and honest budget analyses, you will now be ready to scout for an affordable vehicle.
“If you’ve carefully considered your expenses, calculations and affordability range, your application for finance should be approved,” concluded Wesbank.