Financing a car goes beyond just a monthly payment.
Understanding how affordability and creditworthiness impact your application is key to securing the best deal. WesBank wants to make the process as stress-free as possible.
The Financial Conduct Authority requires lenders to ensure borrowers can responsibly manage repayments. This means when you apply for car finance, your ability to afford monthly payments is assessed based on two main factors: affordability and creditworthiness.
Affordability explained
Affordability is about how much you can realistically afford for car finance repayments. It’s closely linked to your discretionary income – the money left after covering essential expenses like rent, utilities and groceries.
Boosting your affordability
Create a clear budget to understand your discretionary income. Consider all car ownership costs, including insurance, fuel and maintenance.
Use the tools offered by the WesBank app and website to check affordability upfront, customise finance terms and even sign your car finance agreement – all online! This proactive approach saves time and sets realistic expectations before visiting a dealership.
Creditworthiness explained
Creditworthiness reflects your likelihood of repaying borrowed money, based on your credit history. This means your credit score, not influenced by race or gender, plays a vital role.
Improving your credit score
- Regularly review your credit report to ensure no errors exist.
- Pay bills on time and reduce outstanding debt to improve your credit score.
Best practices for approval
- A larger deposit lowers monthly repayments and shows lenders financial responsibility. Consider trading in your existing car to reduce the finance amount.
- Reducing current financial obligations improves affordability. Focus on paying off existing debt to improve your financial standing and increase your discretionary income.
Get help
Finance and insurance consultants at reputable dealerships can explain finance agreements and tailor them to your needs. Consider dealerships affiliated with the National Franchised Dealers Association for reliable information and aftersales support.
Even consulting a financial advisor can help manage your finances better and improve your credit health.
By understanding affordability and creditworthiness, and utilising available tools and resources, you can approach the process of financing a car with confidence.
Source: MotorPress
