A minimum deposit is the amount of money provided to the car company for purchasing the vehicle's ownership. When you put down a minimum deposit for the car, it means you are interested in buying the car and want to put it on hold.
However, just like any other buyer, you must have a lot of questions regarding the minimum money deposit on a new car. To help you, we have created a guide that covers:
So, let's begin:
One of the many benefits of a deposit when buying a new car is less interest. Note that if you are putting down a generous amount as a deposit, you wouldn't have to take larger loans from the bank. This will result in lower interest to meet the loan payment.
Besides this, deposits offer other benefits like-
But, if you put down a generous down payment, the extra amount would balance out the costs. It will also maintain the equity of your car.
Technically, yes. One of the most typical questions that people ask is how to get the best deal on your car? The answer is through a car deposit. The more money you deposit, the better deals you get.
Moreover, it cuts down your monthly payments and interest rates. This means you won’t face financial hardships or won’t need to overspend to meet your car loans. This eventually saves you money.
There is no hard-and-fast rule for minimum deposits when buying a new car in South Africa. The general rule of thumb is to make a minimum deposit of 20% if it's a new car. Similarly, if you are buying an old or used car, you can put down a minimum deposit of 10%.
So, the amount depends on the type of car you are buying. The rest of the amount is financed by the lender. As per the size of the loan, some financial institutions can provide you with full 100% finance for the car amount.
But, we recommend depositing some amount for your car purchase. That's because it offers you more flexibility and prevents the hassle of paying fees or interest charges. While taking car loans, make sure to ask your lenders about the loan period and approximate payment for your idea.
Before answering this question, let's learn about the average salary of working professionals in South Africa. As per the statistics, a person working in South Africa earns nearly 31,100 ZAR every month. Their lowest average is 7,880 ZAR, and the highest average is around 139,000 ZAR. Note that this average salary covers everything from housing to transport.
Salaries differ from profession to profession. Besides that, this is just a statistical demonstration. No wonder the real numbers may differ from the estimate. However, let's go ahead with what the statistics say, i.e. 31,100 ZAR per month.
Now, as per South African Banks, you shouldn't be spending more than 30% of your yearly salary on a new car purchase. Similarly, for monthly salaries, it shouldn't be more than 10-25%. However, it's always recommended to follow the minimum benchmark, i.e. 10% of your monthly salary on a new car purchase.
So, 10% of the 31,000 ZAR equals 3100 ZAR. If your salary is 31,000 or nearby, you will be allocating 3100 ZAR for a vehicle purchase. In the case of 25% of your monthly salary, the amount will be 7750 ZAR. Note that this percentage is applied to the full vehicle expense. This includes
Regardless of the loan amount you get, most experts would suggest you not go overboard with your finances. The pandemic is a clear example of how you could encounter the unexpected. So, keep such things in mind before making a new car purchase.
There is no such minimum salary to qualify for car finance in South Africa. Lenders look for certain aspects like your monthly living costs and compare them with your monthly income. Based on this analysis, they interpret whether you are capable enough to afford loan payments.
They also look for other factors like multiple incomes, credit card debts, loan debts, or any financial dependence of a person on you. Simply put, lenders estimate your loans by monitoring your situation.
Lenders also consider your debt-to-income ratio when providing finance for your new car purchase. Debt-to-income ratio is the percentage of monthly gross income that goes towards paying the debt. For a car loan, an ideal Debt-to-income ratio should be around 20%. It shouldn't be more than 40% else, you may not qualify for the loan.
To get a fair idea of the minimum monthly salary (and other requirements) for a car purchase, check out the criteria that are followed by some renowned finance houses:
Age and Qualification Criteria
For a finance agreement, you must be 18 years or older. Some finance houses may also ask you to have a degree or higher diploma that you must have secured within three years of the finance application.
Monthly Salary and Employment
Finance houses may only consider you if you are permanently employed with a decent salary. The minimum monthly amount differs from lender to lender. Some may offer you the finance with 5000 ZAR monthly, while others may ask for 7500 ZAR monthly or more!
They may also ask for:
This is just a rough idea of the requirements to qualify for car finance in South Africa. Make sure to read all the details of the finance house that you are considering for the loan. If you have any doubts, talk to their customer care executives for assistance.
In a car loan, a car down payment is the part of the car price that you pay from your savings. The remaining amount is paid by the bank/lender.
On obtaining a car loan, your car down payment and monthly payment goes towards the entire purchase price of the car. Once you meet the loan term and loan amount, the vehicle is yours!
While a small down payment may feel feasible as you will have more cash in your pocket, it's best to put down large down payments on a car. That's because it ensures more equity and a quick loan payoff.
Decided on your dream car already? Make your deposits and buy it today! Hopefully, this article has answered all your query on car finance with deposit in South Africa.