You’re not alone if you’re Googling ‘online vehicle finance’. Most South Africans don’t have the capital to pay cash when buying a new or used car. Paying off a car in monthly instalments is your reality. And despite the recent repo rate cut, money is tight, and you want to get the best bang for your buck. Your solution? Do your due diligence before selecting a new or used vehicle to buy, and ensure your credit record is good before committing to monthly instalments for the next 3-6 years. 

Let’s begin by answering your questions concerning credit scores, credit profiles and online car finance applications:

What Is Your Credit Score?

A credit score is a numerical representation of your creditworthiness, indicating the likelihood of repaying debts on time. 

In South Africa, credit bureaus assign scores ranging from 0 to 999, with higher scores reflecting better credit profiles. This score is crucial for lenders to assess the risk of extending credit to an individual.

What factors affect your credit score?

• Payment History: Paying your bills and debts on time increases your score, while missed or late payments can significantly lower it.
• Credit Utilisation: The ratio of your current debt to your credit limit. Maintaining lower balances relative to your credit limit positively impacts your score.
• Length of Credit History: A more extended credit history provides more data on your financial behaviour, which can improve your score.
• Types of Credit: Managing a mix of credit types – including credit cards, mortgages, and personal loans – can favourably affect your score.
• Recent Credit Inquiries: Thinking of shopping around when you apply for car finance online? Think again. Multiple credit applications in a short period can be perceived as financial distress, potentially lowering your score.

Credit Score vs. Credit History

While both terms relate to your financial reputation, they serve different purposes:

• Credit History: A detailed record of your past borrowing and repayment activities, including information on credit accounts, payment timelines, and any defaults or bankruptcies.
• Credit Score: A numerical summary derived from your credit history, representing your creditworthiness at a specific point in time.

Your credit history provides the data, and the credit score interprets this data into a single, concise metric.

Methods of Applying for Car Finance Online

Have you searched ‘how to apply car finance online in South Africa?’ 

This is not a straightforward question since those seeking finance have several options available for applying for vehicle finance:

#1 Direct application through financial institutions

The traditional method of visiting your bank and filling out a loan application has now become more manageable. 

Many financial institutions offer options to apply for car finance online, allowing you to weigh the interest rates offered through various institutions before settling on a preferred provider. 

(Although it is a thorough method of finding the ‘best’ credit, this process could negatively affect your credit score). 

#2 Utilise credit bureaus and financial services

Before applying for credit, it is advisable to check your credit score online. This can be done through free credit checking platforms like ClearScore, the Experian App and TransUnion.  

Knowing your credit score can help inform your decision-making on the cost of a new or used vehicle and how much credit you could apply for. 

#3 Apply through automotive dealerships

Reliable automotive dealerships like Weelee offer straightforward, simple and free online car finance applications. 

Simply select the vehicle you want to enquire about, click the ‘quick finance’ button and fill out an online car finance application in less than 90 seconds. 

The dealership will promptly respond to you concerning your vehicle finance application, connecting you with a financial services provider and approved rate of interest.

What documents are required to apply for car finance online?

When preparing your car finance application, ensure you have the following documents:

• Proof of Identity: A valid South African identity document (ID book or ID card).
• Driver’s License: Both front and back copies of your valid driver’s license.
• Proof of Residence: A utility bill or official statement reflecting your current residential address, dated within the last three months.
• Bank Statements: Three months’ bank statements to verify income and financial stability.
• Proof of Income:
  • Salaried Employees: Recent payslips from the last three months.
  • Self-Employed or Commission Earners: Payslips and stamped bank statements from the previous three months.

How to choose the right place to buy a used vehicle?

Applying for vehicle finance is a huge commitment. You don’t want to waste time, effort and money on an unreliable used vehicle that will cost you thousands in repair bills. 

That’s why you need to apply for car finance at a trustworthy used car dealership. 

Ensure the dealership you are visiting has the following:

• Thousands of independent, honest reviews on a platform like Hellopeter
• Independent condition reports on all vehicles up for sale
• Options to sell or trade in your old vehicle when buying a new ride
• Negotiable pricing and low-mileage vehicles
• Financing options are available online or at the dealership
• Transparency and service history on all available vehicles.

Now that you’ve conducted thorough research concerning your credit history, go out there and find a reliable used vehicle and reasonable car finance to make your dreams a reality.