How Traditional Car Financing Can Become Unaffordable

How Traditional Car Financing Can Become Unaffordable

By | 2018-07-30T15:26:17+00:00 20 August 2018|Blog|

Walking through one of the many auto cities and the shopping centre’s in South Africa, it is hard not to notice the eye-catching vehicle displays and advertising that makes you wish you owned that brand new vehicle. Car manufacturers spend millions advertising the latest models with luxurious features, and financing companies are increasingly offering alternate finance options that make it a lot easier for you to drive away in a brand new vehicle within an hour.

Financers are now offering deposit-free car payment plans and lower monthly premiums with a higher balloon payment and increasing the contract period of the vehicle over many more months. Personal loans and credit card debt are contributing to the national debt crisis, so too is vehicle finance debt.

When buying a new vehicle, you need to consider the maintenance and insurance costs involved, especially the fuel consumption. Not only do luxurious cars need to be serviced by manufacture approved dealerships, but the parts can be more expensive too, especially when imported. Most often, a new vehicle with a high retail value will incur a higher insurance premium than a pre-owned car with a lower market value.

Another consideration is that if banks increase interest rates, the monthly installment you are currently paying will also increase, which can quickly make your existing car finance agreement, unaffordable.

The solution?  A rent-to-own vehicle finance plan, where your monthly installment is fixed for the duration of the contract period and does not change in line with inflation.

At Earn-a-Car, you’re able to choose from a wide range of high-quality pre-owned cars at affordable prices. If you have a poor credit record, we’re able to help you too.  Whether you are looking for car finance or simply want a more affordable car financing solution, get in touch with Earn-a-Car today.