What’s the Needed Credit Score to Buy a Car in South Africa?
What’s the Needed Credit Score to Buy a Car in South Africa?
Requirements and Tips for Approval
Dreaming of hitting the road in a new car? In South Africa, your credit score is the key that opens the door to affordable vehicle financing. But what’s the magic number you need to buy a car, and how do you ensure lender approval for vehicle finance?
"Car loans remain in high demand, but lenders do tend to be selective."
Our ThreeSixty.me, team is here to guide you with handy tips within the South African context. Let’s steer you toward success!
What Should Your Credit Score to Buy a Car in South Africa be?
In South Africa, your credit score typically ranges from 0 to 999, depending on the credit bureau calculating it. So, what’s the credit score to buy a car? Most lenders prefer a favourable, higher score to consider your application. Having a credit score of 800 and over (in our ThreeSixty.me scoring terms) is where the real benefits can kick in. This means lower interest rates and faster approvals. However, “it’s good to remember that a low credit score doesn’t automatically rule you out, and options are available if you have a lower credit score,” highlights ClearScore.
In partnership with VeriCred Credit Bureau (VCCB), here’s what ThreeSixty.me’s typical scoring breakdown reflects to help you know where you stand for vehicle finance approval:
- Excellent/Very Good: 901 – 999 / 1 000
- Good: 876 – 900
- Okay/Average: 851 – 875
- Fair/Poor: 751 – 850
- Bad: 601 – 750
- Very Bad: 3 – 600
- No Score: 1-2 (not enough information available to evaluate your creditworthiness)
Want to know what’s your rating? Get your credit score & more! FREE with ThreeSixty.me
Your Credit Score Matters When Buying a Car (With Key Stats)
Your credit score is your financial roadmap to car ownership as lenders use it to determine how reliably you’ll repay your credit. A strong score can save you a large sum in interest over the loan term, while a shaky one could mean higher monthly payments or even rejection.
In South Africa’s competitive credit market, vehicle finance plays a major role, but trends, as indicated via TransUnion’s Industry Insights Report, show a 7.5% year-over-year decline in new vehicle finance originations due to rising interest rates and the weakening Rand. Despite fewer approvals, the average vehicle loan amount increased by 4.6% in Q3 2023, reflecting the growing cost of vehicles.
Lenders are also tightening their standards, with a 17% increase in below-prime accounts (borrowers with lower credit scores) compared to the previous year. This means if your credit score falls into a subprime category, you may struggle to secure financing, or face significantly higher rates. Additionally, serious delinquency rates have risen by 70 basis points year over year, emphasising the importance of a strong credit profile to access promising loan terms and avoid financial strain.
By maintaining a solid credit score, you position yourself for better financing terms, lower interest rates, and a smoother car-buying experience in an increasingly cautious lending environment.
South Africa’s Credit Stats: The Big Picture
According to the National Credit Regulator’s (NCR) Credit Bureau Monitor (September 2024), there are more than 28 million credit-active consumers and a staggering 10 million struggling with impaired records, think late payments or defaults. Car loans remain in high demand, but lenders do tend to be selective. Cars.co.za highlights several reasons why vehicle finance applications get rejected, with a bad credit score being one of the key factors.
Want to beat the odds? Taking charge of your credit score with ThreeSixty.me is your ticket to securing better offers and getting behind the wheel.
Requirements Beyond the Credit Score
When it comes to vehicle finance, here’s what else you may require apart from your credit score to buy a car in South Africa:
- Proof of Income: A steady paycheck (the amount depends on the registered credit provider) proves you can manage repayments.
- ID and Address Proof: A valid SA ID and a utility bill verify who you are and where you live.
- Deposit: Expect to put down 10 to 20%, for example: R20 000 on a R200 000 car, to improve your chances of approval and reduce your credit burden.
- Debt-to-Income Ratio: Keep your debt compared to your income amount under 40%. Too much debt compared to your gross income can stall your approval, no matter your score. Lenders are bound by affordability rules, meaning they assess your overall debt and income before approving finance, even with a great credit score.
Get your credit score for FREE, – ALWAYS with ThreeSixty.me
Top Tips to Boost Your Credit Score for Vehicle Finance Approval
1. Pay On Time, Every Time
Late payments are a credit score’s worst enemy. A single missed payment can stay on your report for up to five years in South Africa. Use debit orders or alerts to stay on track, six months of perfect payments can rev up your score fast.
2. Lower Your Credit Usage
Keep your credit utilisation below 30%. On a R15 000 limit, owe no more than R4 500. High usage flags you as risky, especially for big loans like vehicle finance. Pay down balances to show you’re in control of your financial situation and journey.
3. Limit Credit Applications
Space out your credit applications and only apply for vehicle finance when you’re ready to roll.
4. Fix Errors on Your Report
Mistakes happen, sometimes due to fraud or clerical errors. Regularly check your report with ThreeSixty.me (for FREE, ALWAYS by the way) to catch and fix inaccuracies. A quick correction could accelerate your score toward approval territory.
5. Build Credit with Small Steps
No credit history? Start small with a store card or modest loan. Pay it off like clockwork, and in six months, you’ll have a score to build on. It’s a classic move to up your credit score to buy a car in South Africa.
What If Your Score Is Low?
Stuck with a low score? Don’t hit the brakes yet. Higher interest rates might apply, but a bigger deposit or a co-signer with strong credit can help. Or spend six months or more to boost your score with our handy tips. Your persistence and patience could save you more than R10 000 in interest on a R200 000 loan by securing a lower rate!
Handy Resources for Car Buyers
- WesBank Car Finance Calculator: Estimate your car loan affordability at https://www.wesbank.co.za
- AA South Africa: Empower yourself with the latest news on car buying and financing services at https://www.aa.co.za
- ThreeSixty.me: Track your score and gain insights on how to improve your credit journey. FREE sign up at https://threesixty.me/signup
Ready to Drive Away?
The credit score to buy a car in South Africa isn’t a mystery, it’s about hitting at least 850+, and backing it with smart financial moves. With ThreeSixty.me, you’ve got the tools to check, build, and master your score. Start today, and soon you’ll be cruising with a vehicle financing deal that fits your budget, powered by a strong credit score!
ThreeSixty.Me
Your friendly neighbourhood Credit Scoring App.
About ThreeSixty.me
ThreeSixty.me is your go-to platform for mastering your financial future. Whether you’re tracking your credit score, improving your financial health, or unlocking better opportunities, we provide the tools and insights to help you stay in control.
Sign up today and take charge of your credit journey!
