How Does Car Finance Work In South Africa

Congratulations to you if you do not need any financing help in getting that dream car of yours. But to those who may need financing, its appropriate that you understand how it all works. That is why I have dedicated this space to show you how Car Finance Work in South Africa.

It might interest you to know that a large majority of car owners you see driving around probably went for a car loan. But will they tell you if you don’t ask? Is there any shame in going for a car loan? The answer is a big NO!

Hence if you find yourself asking this very important question of “How Does Car Finance Work In South Africa?” Then you’re on the right path to securing financing for your desired car whether brand new or used.

It is not enough knowing how it works though. You must examine yourself and come to a conclusion whether you can pay back the loan in the course of the loan term.

You can either choose to get financing at the dealership or an auto finance company of your choice.

READ ALSO: How Does Car Finance Work in the UK?

How It Works 

Once you think you are eligible for a car loan, after checking all the requirements and getting your needed documents, you will have to consider how you wish to finance your car. Either at the dealership or an auto finance company.

  • At the dealership: financing your car at the dealership means that the financing comes from in-house. This means that the dealer is offering you the vehicle on the basis that you pay back in installments directly to them without having to deal with a third party lender. Financing at the dealership helps to reduce the back and forth you usually have to do when financing with an auto finance company. However, it also has its downside. Dealerships usually offer shorter terms meaning you’ll make larger monthly payments and has relatively higher interest rates as well.
  • At The Bank/ Credit Union: another option available to you is the bank, credit union or any other auto finance companies. Most of them usually have dealerships they have partnered with hence once they approve your car loan, you must purchase your car from any of those dealerships. Comparatively, its cheaper to finance your car with a bank or credit union than in-house financing.

What Are The Eligibility Requirements?

Getting financing isn’t automatic hence there are certain eligibility requirements these auto finance companies look out for when considering a car loan application. They include;

  • Applicant must be at least 18 years of age
  • He or she must be a South African citizen/ permanent resident
  • Must have a valid South African drivers license
  • Applicant must also be employed with a stable income
  • Must have a good credit history

READ ALSO: How Does Taking Over A Car Loan Work?

What Are The Documents Required? 

There are certain documents cuts across which lenders may request from you when applying. They include;

  • Proof of identity (valid South identity card)
  • Proof of residence (you can provide a recent utility bill)
  • Drivers License
  • Proof of your income; provide recent paystubs


There is absolutely nothing wrong in going for a car loan. However, the question is are you ready for it? Are you ready to commit yourself to making monthly payments for the entire loan term?

If the answer to the above questions are “yes” then you can go ahead. But note that both of the financing options (either at the dealership or bank) has its own merits and demerits hence you must analyse them carefully and decide on which one to go for.

There are a number of companies that provide very good auto finance in South Africa such as Standard Bank, FBN, Wesbank, Absa etc.

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