Buying a car is an exciting process but it’s important to acquaint yourself with the facts before signing a vehicle finance contract.
Here are 3 things you should know before signing a vehicle finance contract.
- Ask, ask and ask again
When you arrive at the dealership to finalise the deal, you’ll be guided through the process by the dealership’s appointed Finance and Insurance (F&I) representative.F&Is are registered with the National Credit Regulator and is FAIS & FICA qualified, if you have any questions about your finance or deal.
- Get familiar with finance
In the process of arranging your contract you’ll be given the option to choose a fixed or linked interest rate. Know the difference, and how this will affect your budget in the short and long term.WesBank states: “A fixed interest rate on your loan will be higher at first, but it will also remain the same for the duration of the loan. Conversely, a linked interest rate will be lower at first, and save you money”. “Make a decision about the contract period. This is how long you’ll be paying off the loan. You can choose from 12 months, all the way to 72 months.”Ensure you know the advantages of putting down a big deposit. By doing so you will save on interest payments, and have lower monthly repayments.
- Get insurance
One of the important documents to take along when signing your contract is proof of insurance. This only applies if you have an existing insurance policy and have opted to arrange your own insurance. If you have asked the dealership to arrange an insurance quote, they will provide you with the correct documentation.
WesBank states: “Insurance is vital because you will not be allowed to drive the car out of the showroom without proving to the bank that the vehicle is insured. In the extreme scenario that you are involved in an accident straight after taking delivery of your new car, you can rest safe knowing that your insurance policy will cover everything.”
The F&I will also explain that you are required to maintain comprehensive insurance on the car for the duration of the finance contract. This protects you and your finances – if anything happens to the car, the insurance will pay out the insured value of the car and you will not have to worry about paying back the loan for a car you no longer have