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Best payment plans to assist car buyers

WesBank says it has developed three of the most common purchase plans to simplify the mumbo-jumbo by assisting customers faced with confusing terminology and figures before they can even think about driving away in their new wheels

WesBank’s Executive Head for Sales and Marketing Ghana Msibi said the new purchase plans will help customers when planning to buy cars to pick  the best payment options.

“The temptation of a new car can sometimes lure a buyer into a commitment that isn’t an ideal fit for their budget.

There are flexible finance options for buyers to choose from.

WesBank wants to ensure that all consumers understand what’s available so they can make smarter, more responsible decisions on their car-buying journey,” said Msibi.

  1. Instalment finance

This is the most straightforward of all vehicle finance options.

We calculate monthly repayments are on the purchase price of a vehicle minus whatever deposit customers put down at the start of the deal.

We can structure finance terms into time frames of between 12 and 72 months.

The longer the term, the lower the monthly repayment will be but be aware interest will add up to longer terms and the total amount they pay again to the bank will increase proportionally.

  1. Instalment finance with a balloon payment

Similar to instalment finance, except a portion of the purchase price put aside so we calculate the repayments on a lower amount.

Balloon payments are like deposits except they’re payable at the end of a term instead of at the beginning.

Buyers must be cautious of the amount put into a balloon because they will be responsible for the lump sum once they finish the finance term.

While it may be attractive to have lower monthly repayments because a larger chunk of the purchase price they put into a balloon, the repay back of a balloon can be an unexpected debt as this amount will either need to settle or refinance it at the end of the deal.

  1. Guaranteed future value 

Guaranteed future value, also known as Guaranteed Future Value (GFV) or many brands-specific titles, is becoming an increasingly popular form of vehicle finance in South Africa.

It is important to note that a vehicle’s value depreciates (losing monetary value) from the moment it leaves the showroom floor.

In line with this depreciation, a GFV plan calculates what the future monetary value of a vehicle if specific conditions of a vehicle condition, mileage, and maintenance it will meet.

I guarantee this future value at the start of the agreement.

This makes planning ahead easier as consumers know exactly what their car will be worth once it reaches the pre-determined contract term (usually between three and four years).

I give the customer three choices at these points – they can either enter another GFV deal and drive away in the new vehicle, settle the outstanding amount and own the vehicle, or simply return the vehicle to the respective dealership and walk away (provided the driver didn’t exceed the allotted mileage and the vehicle is in acceptable condition).

With a GFV plan, a consumer is essentially only paying for the use of the car.

This is why it’s important to know more or less the distance the vehicle will cover during the GFV term.

Consumers are liable for penalties if any conditions of the GFV agreement aren’t met.

WesBank offers a handy Purchase Price Calculator to help determine the loan amount your budget will support.

While this calculator is only used for estimation purposes, it’s a good indicator of the price range in which you can shop.

There’s also a Vehicle Finance Calculator to help work out monthly repayments based on term length, deposit, balloon amount and interest rate.

Every WesBank-approved car dealership has a Finance and Insurance (F&I) executive to inform and assist consumers in their buying journey.

The F&I can give you financially sound advice and explain what you can and cannot afford because their role is regulated by the Financial Advisory and Intermediary Services (FAIS) Act as well as the National Credit Act (NCA)


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