Crushed by car instalment burden | Fin24
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Crushed by car instalment burden

Mar 10 2015 17:35

A Fin24 user is desperate to find a way to pay less on his vehicle instalment each month. He writes:

I currently have a vehicle on finance. The problem I have now is that I am feeling the pressure of paying such a high instalment.

I would like to trade in this vehicle for something cheaper, even second-hand, but I am worried that I owe so much on this one that the car companies would add it onto the new vehicle and I would be back to paying the high premium.

I would greatly appreciate whatever advice you may have to offer me. The most important thing for me is to pay a cheaper instalment.

Is there a way for the finance to be structured around my needs?

READ: Car finance and your credit rating

One of the experts at Absa responds:  

What do I do if I find that I’m struggling to pay for car?

The first thing to do is talk to your bank. You can contact your bank’s debt repair line to structure an affordable and suitable payment arrangement.

READ: No vehicle finance despite good credit rating

What can I do if I cannot afford my car any more?

There are a few options to consider when deciding on how to manage your vehicle finance. The first is downgrading your vehicle to a more affordable one.

Go to an authorised dealer to either establish a trade-in value or negotiate the sale of your car. This will help you determine what alternate vehicle is comfortably within your price range or, if you sell your car, provide a cash injection to ease financial pressure.

However, if the settlement value of your vehicle is in excess of the trade-in or the market value of the vehicle, your next step is to consider extending the payment period to avoid a loss.

Banks are able to restructure finance agreements to extend the payment period, which will allow you more expendable income monthly.

What happens if I skip a payment?

It is important to remember that skipping a payment or defaulting in any way should not be an option. This impacts the customer’s credit record and reflects badly should they apply for finance in future.

Don’t cancel your car insurance. You could find yourself in a situation where your car is stolen and you are still liable for the payment.

This is also relevant in the case of an accident or if customers experience mechanical failure and are unable to pay for repairs. This could cause you to fall into arrears on the vehicle repayments and face possible repossession. This also impacts on your credit history.

ALSO READ: Surprised by car finance terms

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absa  |  money  |  money clinic  |  vehicle finance


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