How Car Financing Works in South Africa

How Car Financing Works in South Africa

affordable car

A look at how to pay for your first car.

In South Africa, public transport is not as readily available, and well-coordinated, as it is in some other countries. This means that a great many South Africans have their own cars. This provides them with reliable transport any time they need it, and gives them a sense of freedom. So, if you have decided that it is time to buy your own car, and are looking for an affordable first car, you are probably thinking about vehicle finance as well.

There are plenty of affordable car options available, but not everybody has access to the cash to be able to buy a car outright. For this reason, many people turn to vehicle financing as an effective solution. So, if you are thinking about financing your affordable first car, here are some of the options which are available to you:

Hire Purchase

This is a very common form of vehicle finance, and is probably the option that most South Africans choose. In this option, the financier will purchase the car and you will pay it off in instalments over a period of anything from six to sixty months. While the financier owns the car over this period, you are able to drive it and are responsible for the running costs and maintenance. Once you have paid back the full amount of the car, it is transferred into your name and becomes yours outright.


This is very similar to the hire purchase option, although it does have a few significant differences. When you lease a car you are essentially renting it for a prolonged, predetermined period of time. The longest available lease period is sixty months. At the end of the period, you will have the option to buy the car from the financier. This will usually involve a final residual payment. This is an option that is popular with businesses because the lease payments are tax deductable.


This is almost identical to the lease agreement in functionality, in that you will agree on a period over which to rent the car, except that at the end of your rental period you will not be given the option to buy the car.

Maintenance rental

Like the rental agreement, you won’t have the option to purchase the car at the end of your payment period. However, maintenance rental means that all the maintenance and service costs are included in your monthly instalments, making it easier to budget your expenses.

With some great dealerships offering some excellent deals, you won’t have trouble finding an affordable car. And, with these varied financing options, you will be able to find a payment plan that perfectly suits your needs.

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