Friday, September 21, 2012

Vehicle Finance - What You Need to Know

Instead of resulting to other forms of loans, vehicle finance emerged to cater for the specific needs of soon to be car owners. Vehicle finance now permits more people the possibility to attain a vehicle, without having to save up for a long time first. It is also relatively easy to apply and the process doesn't take too long.
So once your financing has been approved all that is required is to pay a small down payment upfront and the rest in monthly installments- becoming a part of your monthly responsibilities.
Vehicle finance options
The two types of vehicle finance options are - Installment Sale agreements and Lease Sale agreements.
Installment Sale Agreement: the vehicle belongs to the dealer, or private seller who purchases the vehicle. Payments are made over a specified period, and after your last payment you will take full ownership.
The interest rate of this option can either be fixed or of a variable nature, and the upper limit of interest that can be charged by a financial institution is governed by the Act of Parliament (the National Credit Act).
A Lease Sale Agreement: with this option you can lease a vehicle from the owner with the option to buy at the end of the agreement. The upside to this option is the fact that you will have the convenience of having a vehicle without outright ownership and you could get a tax return.

What are the legal implications of buying a vehicle?
Anyone under the age of 18 may not apply for vehicle finance.
As the buyer you have the right to receive a vehicle free of any hidden faults, but only if you purchase your vehicle through an approved dealer.
Your responsibilities are:
• Keep the vehicle in impeccable condition until your final credit agreement has been paid
• To make sure that the deposit is paid and the remaining installments
• Ensure that your vehicle is insured
• To take delivery of the vehicle on the agreed date
If you default on your repayments, the finance company has the right to:
• Sue you for the arrears
• Claim damages from you
• Cancel the sale agreement
• Repossess the vehicle
The signing of a surety:
If you need someone to stand surety for you in order to qualify for credit, remember that if you fail to make a payment, the financial institution can hold the person who signed for you personally responsible for the outstanding payments. The financial institution will still ensure that you will be financially reliable to make your payments.
Lastly, make sure that your vehicle comes with a warranty. A good dealership will provide extra services such as vehicle finance and insurance, licensing for the vehicle, a vehicle condition report, roadworthy certificate etc.