No finance cars
Rent To Own a Car, Auto

What are no finance cars and how do they differ from financed cars?

A no-finance car is basically a car that has been purchased without taking an official loan from a recognized banking institute or financing company. The normal route that a prospective buyer of a car or bakkie follows is to seek funding for a car directly from a bank or institute that provides financing for a car on a fixed term.

Banks require credit checks and a satisfactory monthly income before they will lend any amount of money to you. They will check to see if their money can be trusted with you and that you are able to make the monthly payments without problems. Once they are happy that you comply with their requirements they would approve you for a loan.

Bank-financed cars

The bank would normally seek a downpayment although this is not always the case. They would set a term period and monthly payments that would cover the balance outstanding on the car as well as any interest that they charge.

Normally a bank would require proof of insurance (for your account) before you are allowed to drive the vehicle away from the dealer where you purchased the vehicle.

From day 1 the car will be registered in your name although the bank will hold the title to the car. Once the car has been completely paid for the bank will release the title.

No-finance cars (rent to own a car)

A no-finance vehicle is an agreement whereby you will “rent” a vehicle from a company for a fixed term. Once the term is completed the vehicle becomes yours and will be registered in your name. Up until the completion of the payments the vehicle ownership remains with the dealer.

The more popular term for a deal like this is rent to own a car.

With a rent-to-own car deal, there are no credit checks or banks involved. The companies involved in rent-to-own deals have designed the deals specifically to allow those who have credit issues or who are blacklisted or under debt review to be able to buy a vehicle. After all, owning a vehicle is almost essential to being able to travel around for business and pleasure. Unfortunately, our country has wide open spaces with long distances to travel that are not serviced by satisfactory public transport as found in some western countries.

You would be required to place a deposit on the vehicle of your choice and provide proof of basic income. Usually, the requirements are a minimum monthly income of R12 000 to R15 000 per month.

The monthly payment on a rent-to-own vehicle is usually higher than on a bank-financed vehicle but this amount includes insurance, a tracker, and sometimes even includes maintenance plans. Make sure that you fully understand the provisions and terms that are part of your no-finance car deal before you commit to the deal.

Can I buy a no-finance car with bad credit?

No finance cars are designed specifically for those who are unable to get financing directly from a recognized banking institution.

In a nutshell, these clients are welcome

  • Debt review – no problem
  • Blacklisted – no problem
  • Poor credit history – no problem
  • No credit history – no problem
  • Self-employed clients – no problem

You would need to supply a valid driver’s license and 3 months’ bank statements, as well as 3 months, pay slips.

Conclusion

No finance cars are a great method for credit-handicapped clients to be able to own a car. While the cost may be slightly higher than a bank-financed vehicle the benefit of having your own vehicle is remembered long after the extra expense is forgotten.

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