As a first-time car buyer who’s recently entered the workforce, the ability to own a car is a significant milestone. It allows you to travel wherever you want without being dependent on someone else. And public transport isn’t the most reliable or safe option in South Africa. But, as exciting as it is to have your own set of wheels, it can also be overwhelming. Whether you have been working for ten years, or you are a recent graduate, the cost of owning a vehicle can be a lot to take on financially. Apart from the monthly payment you have to make towards your loan, you also need to consider; car insurance, maintenance and the cost of petrol.
Those expenses will seem like a lot to take on when you are living on an entry-level salary. But when it comes to the financing of a vehicle, you can be confident that you might receive assistance. Lenders have a graduate programme which allows graduates to qualify for graduate finance. It’s a finance option that is tailored to graduates who need a vehicle but have no credit score or no credit history. But finance isn’t the only thing you need to consider. Here are five signs that show you are ready to own a car.
While this might seem obvious, it’s important to consider your income and how stable it is. This is especially the case for recent graduates who have only started working. Are you a permanent employee, on probation, fixed-term contract or are you interning with a high probability of being hired permanently? Knowing exactly where you stand with your income determines what you can or cannot do.
When applying for funding, the lenders will need proof of employment such as a signed employee contract, a recent payslip or a three month’s bank statements, depending on how long you’ve been working. If you have a job offer but haven’t started working, then they’ll require a signed employment contract. This is to ensure that you’ll be able to keep up with your monthly payments. If you are on a fixed-term contract or still interning, it would be best to wait until you have written confirmation that they’re hiring you permanently or once you enter your new position. This will also increase your chances of being pre-selected, as you can ensure lenders that you have an income to cover the costs.
Whenever you plan on making a big purchase like a car, you need to do adequate research to learn exactly what is expected of you. And you’ll learn more about suitable cars for graduates in South Africa in the process. It’s always a good idea to consider vehicles that have good fuel consumption, are reliable and affordable. Knowing everything beforehand gives you an idea of how much you will need to pay once you get pre-selected for financing – also allowing you to budget accordingly so that you still have money for other aspects of your life.
While most of the popular graduate cars are affordable, you need to review your finances and be sure that you can afford a car loan. It is no use to purchase a vehicle when you know that you will only be left with a small portion of your salary, while still needing to do other things like take care of family, pay rent, utilities and groceries as well as entertainment.
As important as it is to own a vehicle, you need to have some freedom to afford your other needs and wants. Your salary should also never just be enough for your needs as that can leave you frustrated and lead you into a debt trap. Be sure that you can still afford to do everything you need as well as what brings you joy before you get into a loan agreement. Lenders who offer graduate finance have a car finance app that will give you an affordability calculator to help you see whether you can afford to pay for your vehicle. The app can also assist you in applying and customising your deal, and more.
Your ability to afford a vehicle isn’t the only thing that comes into play when you get an auto loan. You need to know how to stretch your Rand. If you don’t know how to be savvy with your money, then you can fall into many debt traps or start living paycheque to paycheque. Make sure you can afford all your expenses as well as your variable expenses before you take on graduate vehicle financing.
When you have a vehicle, you will need to adjust your budget and lifestyle to accommodate that. If you find yourself being strapped for cash or unable to afford all your bills while living lavishly, then it may not be a good idea to purchase a vehicle. Make sure your finances are in order before inquiring about a vehicle loan for graduates.
Purchasing a vehicle is a long term commitment, and you need to be ready for it. You need to know that you are in a space to honour your loan agreement and make the payment each month for several years. You also need to ensure that you make your payments on time each month.
One of the reasons why people get a bad credit score is because they miss or make late payments. Each late payment is added to your credit history and will impact you in the future when you’re in need of a loan. Since this is your first loan and an effective way to improve your credit score, you need to be responsible and pay on time. Remember that everything you do is recorded on your credit report.
As a first time buyer, there is a lot that you need to think about before going car shopping; from financing the vehicle to the additional expenses that come with owning a car. If you feel like you’re ready after you’ve asked yourself these five questions, then you can go ahead and prepare to buy a vehicle. It’s important to be sure before you get graduate vehicle finance as it is a long term commitment that you will need to honour. Not only for your vehicle but to ensure that you build a good credit score that will allow you to purchase the house of your dreams one day.
Remember that, although you don’t have a credit score now, applying for graduate finance allows you to build a credit history. So, be sure to do your research, assess your budget, assess your financial needs and wants and make sure that purchasing a vehicle doesn’t become a burden or debt trap. It should be a way to make things easier for yourself while you enter this new chapter in your life. Happy driving!