Vehicle Finance Calculator

The reason you are required to supply paperwork is to prove that you are creditworthy. You will need your ID Book or card, proof of residence (like a utility bill, or even the rental agreement with your landlord) and your last three monthly payslips (if you are an employee), or bank statements for the last three months and the contact details of your current employer. The dealership will then do an affordability assessment whereafter the finance team will assist in securing car finance.

A balloon payment is where a portion of the total value of the car is only due at the end of the contract. Let’s say you buy a car for R300 000 with a balloon of 30% (R90 000), the R90 000 will only be payable at the end of the contract as your last instalment. In other words, you will only pay the monthly instalment on the R210 000 (R300 000 minus R90 000), which makes it much more affordable. Interest will be calculated on the full outstanding amount. The downside to balloon payments is that at the end of the contract, an amount of R90 000 will still be owed on the car. Your options at this point in time will be to settle, trade in your vehicle, or refinance the outstanding amount.A residual applies to car leasing. It’s a value that a third party (such as the dealer, OEM, or bank) guarantees the car will be worth at the end of its lease and is calculated by determining how much the car will depreciate over the course of the lease. A higher residual value translates to lower monthly instalments for the buyer. The big benefit of a residual is that if you don’t want to buy the car at the end of the lease, and you stayed within the mileage/condition limits, you can return the car to the third party. Mercedes-Benz’s ‘Agility Finance’ is a prime example of this.

Interest rates on car loans are personalised, and the final rate is based on your risk profile to the bank. Financial institutions use your credit history and credit score to ascertain whether you will be able to afford those monthly repayments. If you have a good credit score, and your profile shows that you are stable, responsible and money-savvy, your interest rate may be lower. If the banks find that you have missed payments and have outstanding debts, they’ll offer you a much higher interest rate or none at all. That’s why it’s so important to always pay your bills on time.