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A Fin24 user needs a car for work, and wants to know whether he can apply for financing that will combine his vehicle finance and his other debts. He writes:
I need a car for work purposes. I will only be claiming for kilometres served.
My problem is that I already have other debt in my name. Looking into what I am paying, it is almost equal to a car instalment.
Is there any way I can apply for financing that will pay off my debts and cover for a vehicle, so that I'll have only one instalment?
My earnings are R10 400 after deductions and my debts amount to R3 600 monthly.
I also intend to cut some of my policies and take out just one with a reasonable premium.
Friedl Kreuser of 6cents, a division of Summit Financial Partners, responds:
When applying for a new loan, your credit provider is required to look at two things specifically:
1. Your credit record and payment history; and
2. Your current budget and how much you can afford to pay towards a new loan.
So although you already have other debt, it really depends on how well you are paying those existing debts, and how much you have left over after paying your current debt as well as your monthly expenses.
It sounds like you are concerned that you may not be able to afford the new car instalment together with your current debt (although reducing your expenses may help).
If that is the case, you should stay away. Trying to find ways to access debt which you cannot realistically afford is never a good idea and can lead to serious problems further down the line.
Have you spoken to your employer about using a company car, or getting your employer to finance the car instead?
It also sounds like you are interested in consolidating your current debt. Keep in mind that this will only cover your existing debt.
If you do choose to consolidate, keep in mind that you are not actually settling any of your debts, but merely replacing them with one single, bigger debt, so it may not have a big impact on your credit rating.
Also, get at least three quotes to make sure that the fees charged are fair and that the interest rate is reasonable considering the long repayment term.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
I need a car for work purposes. I will only be claiming for kilometres served.
My problem is that I already have other debt in my name. Looking into what I am paying, it is almost equal to a car instalment.
Is there any way I can apply for financing that will pay off my debts and cover for a vehicle, so that I'll have only one instalment?
My earnings are R10 400 after deductions and my debts amount to R3 600 monthly.
I also intend to cut some of my policies and take out just one with a reasonable premium.
Friedl Kreuser of 6cents, a division of Summit Financial Partners, responds:
When applying for a new loan, your credit provider is required to look at two things specifically:
1. Your credit record and payment history; and
2. Your current budget and how much you can afford to pay towards a new loan.
So although you already have other debt, it really depends on how well you are paying those existing debts, and how much you have left over after paying your current debt as well as your monthly expenses.
It sounds like you are concerned that you may not be able to afford the new car instalment together with your current debt (although reducing your expenses may help).
If that is the case, you should stay away. Trying to find ways to access debt which you cannot realistically afford is never a good idea and can lead to serious problems further down the line.
Have you spoken to your employer about using a company car, or getting your employer to finance the car instead?
It also sounds like you are interested in consolidating your current debt. Keep in mind that this will only cover your existing debt.
If you do choose to consolidate, keep in mind that you are not actually settling any of your debts, but merely replacing them with one single, bigger debt, so it may not have a big impact on your credit rating.
Also, get at least three quotes to make sure that the fees charged are fair and that the interest rate is reasonable considering the long repayment term.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
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