What You Need To Know About Car Finance In South Africa

Thinking about buying a car in South Africa but not sure if your finances check out? Around 30% of households already own a vehicle, but many still face challenges accessing reliable transportation. As the economy grows, more options are becoming available to make car financing easier. But what’s the minimum salary you need to qualify for car finance in South Africa? Let’s break it down.

Owning a car in South Africa isn’t cheap—costs have surged by nearly 50% over four years, eating up around 45% of the average person’s salary. With rising fuel, insurance, and maintenance expenses, affordability is key. This guide will walk you through the minimum income requirements, necessary documents, and financing options to help you secure your dream ride.

What Exactly Is Car Finance?

Car finance refers to borrowing money to buy or lease a new or used vehicle. It works like this: a financial institution loans you the cash you need to purchase the car, and you pay them back in monthly installments over a set period. It’s a popular choice because it allows people to get behind the wheel without having to pay the full price upfront.

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What’s the Minimum Salary to Qualify for Car Finance?

If you’re wondering how much you need to earn to qualify for car finance, the answer varies depending on the lender. Generally, the minimum salary ranges from R6,000 to R10,000 per month, with most lenders requiring at least R6,500. Insurance Manager Allesha Chetty suggests that R7,500 is a more common benchmark.

But how long does it take to get approved? According to JustMoney, the process can be pretty quick. You might get pre-approved in as little as an hour, but final approval could take anywhere from three hours to three days, depending on whether you submit all the required documents.

“It can take as little as an hour to have your vehicle finance pre-approved. However, final approval can take anything between three hours and three days, depending on whether you provide all the correct documents that your vehicle finance provider requires.”

Who Can Get Car Finance in South Africa?

Not everyone can qualify for car finance, but it’s not impossible. To be eligible, you’ll need to meet certain criteria and provide specific documents. Here’s what you’ll need:

• Citizenship and Credit History: You must be a South African citizen or permanent resident. Lenders will check your credit history to ensure you’ve been responsible with past loans and repayments.
• Age Requirement: You must be at least 18 years old to sign a financial agreement.
• Employment Status: Having a stable income—usually from permanent employment—is crucial to show you can afford the repayments.

What Documents Do You Need?

Even if you meet the basic requirements, you’ll still need to provide some essential documents to secure financing. Here’s what you’ll need:

• Proof of Identity: A valid South African ID card or green barcoded ID.
• Driver’s License: A copy of your driver’s license, including both the front and back.
• Proof of Residence: A utility bill or statement confirming your residential address, dated within the last three months.
• Proof of Income: Pay slips from the past three months for salaried employees.

What About Self-Employed Applicants?

If you’re self-employed and looking to finance a car in South Africa, you’ll need to show that you’re financially stable. Here’s what lenders typically require:

• Bank Statements: Stamped bank statements for the last three to six months.
• Financial Statements: Detailed reports of your income and expenses.
• Credit History: A solid credit rating is essential.
• Tax Clearance Certificate: Proof that you’re up to date with your taxes.
• Identification and Business Registration: A valid ID and business registration documents.
• Business Plan: A well-thought-out business plan might be required.
• Collateral: Some lenders may ask for collateral to secure the loan.
• Deposit: You’ll likely need to put down a deposit.
• Comprehensive Insurance: Proof that the vehicle will be insured.

Having all these documents ready can make the application process smoother and increase your chances of getting approved for car finance in South Africa.

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How Much Should You Earn to Buy a Car?

Lenders usually require a minimum monthly salary of between R6,000 and R10,000 to buy a car in South Africa. It’s also wise to avoid spending more than 25-30% of your income on car-related expenses. For example, if you earn R20,000 per month, your total vehicle costs should stay below R5,000. Banks typically won’t finance loans under R100,000 or cars older than ten years.

What Credit Score Do You Need?

According to Everycent, the minimum credit score for car finance is typically around 600, though this can vary by lender. If your score is near this threshold, you might be considered a high-risk borrower, which could mean higher interest rates or larger down payments.

What Are Wesbank’s Requirements?

Wesbank requires a minimum monthly salary of R7,500 for car finance. Applicants must be between 18 and 31 years old and hold a degree or higher diploma completed within the last three years. Proof of employment and meeting Wesbank’s affordability criteria are also necessary. If you earn over R6,500, you might qualify for Wesbank’s graduate finance option.

What Does Standard Bank Look For?

According to Standard Bank’s official website, their car finance requirements include a minimum monthly income of R8,000 and a minimum loan amount of R50,000. Applicants can choose repayment periods ranging from 12 to 84 months. Credit assessments will be conducted before approving the application.

FAQs

Buying a car in South Africa can seem complicated, but we’ve got answers to some common questions to help you out.

• How Much Must You Earn to Qualify for a Car in South Africa? To qualify for car finance, you should aim for a monthly income of at least R6,500 to R10,000.
• What’s the Minimum Salary to Buy a Car in South Africa? Most lenders require a minimum salary of around R6,500 to R7,500 per month.
• Can You Get Car Finance if You Earn R5,000? It’s possible to get car finance if you earn R5,000, especially for second-hand cars valued around R125,000.
• What Car Can You Buy for R7,000 Per Month in South Africa? With a monthly budget of R7,000, you could afford second-hand cars valued at about R150,000, depending on loan terms.
• Can You Buy a Car with a Credit Card in South Africa? While it’s technically possible, using a credit card to buy a car isn’t common due to high fees and