Everything You Need to Know About Financing a Car in South Africa

Introduction: Buying Smart, Driving Happy 

Hi there! I’m the Finance and Insurance Manager at GWM Edenvale, and one of the questions I get asked most often is: 

“How does vehicle finance actually work — and what’s the best way to do it?” 

Financing a car is one of the biggest financial commitments you’ll make, so it’s worth understanding exactly what you’re signing up for. Whether you’re buying your first GWM P-Series, upgrading to a Haval Jolion, or exploring the all-electric Ora 03, this guide will walk you through everything you need to know about car finance in South Africa — from interest rates and affordability to real-world examples. 

What Exactly Is Car Finance? 

Car finance is a loan that helps you purchase a vehicle without paying the full price up front. Instead, a bank or finance company pays the dealership on your behalf, and you repay that amount monthly — usually over 12 to 96 months. A balloon payment can be included on finance options up to 84 months, to reduce your monthly repayment.   

Your monthly payment includes: 

• The capital (the cost of the car) 

• Interest (the fee the bank charges for lending you the money, compounded) 

• Initiation fee (this is a once off fee, legislated by the NCA, charged by the finance provider for the facilitation of finance 

• Monthly service fee (this is a monthly service fee that is charged for as long the account is active) 

At the end of the term, once all instalments are made, you own the car outright. 

 

The Main Types of Car Finance in South Africa 

At GWM Edenvale, we work with all major banks — including ABSA, Standard Bank, WesBank (FNB), MFC (Nedbank), Marquis Finance (funded by Standard Bank), and Alphera finance also known as BMW Finance — to find a finance structure that suits your lifestyle and budget. Here are your main options: 

1. InstallmentSale (Most Common) 

You pay the car off over an agreed period, and once the final instalment is made, the vehicle is yours.
Example: 

Lerato finances a new Haval Jolion Pro Super-Lux  for R426,000 over 60 months at a fixed rate of 12%. She pays about R9,400 per month, and after 5 years, she owns the car. 

Pros: You’ll own the vehicle at the end
Cons: Monthly payments can be higher without a balloon payment 

 

2. Balloon Payment (Residual Value)

A portion of the vehicle’s price (usually 20–40%) is deferred to the end of the contract, reducing your monthly instalment. 

Example: 

Themba buys a GWM P300 DC for R600,000 with a 30% balloon (R180,000). His monthly payments drop to around R 10 600 — but he’ll need to settle or refinance the R180,000 after 5 years. 

Pros: Lower monthly instalments
Cons: A large payment due at the end of the term 

 

3. Guaranteed Future Value (GFV / Buy-Back Options)

This structure guarantees what your car will be worth at the end of the term, noted as a balloon payment that will be settled, provided that the conditions have been met. At that point, you can: 

• Trade it in for a new model 

• Keep it by paying the guaranteed amount 

• Return it (subject to mileage and condition) 

Example: 

Zanele chooses a GWM Ora 03 on a 3-year GFV plan. At the end, she can trade it for the latest model, pay the balance to own it, or hand it back. 

Pros: You always know what your car will be worth
Cons: You must stay within mileage limits and service schedules 

 

What You’ll Need to Apply for Car Finance 

Here’s what banks require when you apply for finance through GWM Edenvale: 

• Valid SA ID and driver’s licence (finance option is available with Marquis Finance if you are still in the process of obtaining your license or someone else will be driving your vehicle) 

• Proof of income 

•  Latest 3 months’ payslips and bank statements (if you work for a company) 

• Latest 3 months’ bank statements (if you are self-employed and wish to apply in your personal capacity) 

• Proof of address (not older than 3 months) 

• A good credit record – this generally starts from 670 (to obtain one accurate free credit report visit:  https://www.transunion.co.za/  

If you’re self-employed, and would like to apply in your Company’s name, you’ll also need: 

• Business bank statements,  

• Latest audited financial statements 

• Company registration documents 

 

How Banks Determine Your Interest Rate 

This is one of the most common questions I get as an F&I Manager — and it’s an important one. Your interest rate determines how much you’ll actually pay for your car over time. 

Here’s what the bank looks at: 

1. Your Credit Score

A higher credit score = lower perceived risk = better interest rate.
If you’ve paid your accounts and loans on time, you’ll likely qualify for a low interest rate. 

2. Debt-to-Income Ratio

Banks calculate how much of your income is already committed to debt.
If your monthly debt (including the new car payment) exceeds about 30–40% of your income, they may decline or adjust the rate higher.  Here again, the higher the risk in terms of affordability, the higher the interest rate. 

3. Deposit Amount

Putting down a deposit, can improve your approval odds. It shows commitment and reduces the bank’s risk.  On the other side of the coin, a large deposit can also attract a higher interest rate, due to the low principle debt. 

4. Loan Term

Shorter terms (e.g., 48 months vs. 72 months) can attract higher interest rates, since the overall interest earned is over a shorter time frame.  Shorter periods will however attract lower overall interest charges, even if the rate is a bit higher. 

5. Car Type and Age

Banks prefer newer vehicles, as they retain better value over time. Financing a brand-new GWM or Haval often comes with more competitive rates than older used cars.  Special offers are also ONLY available on New vehicles from time to time. 

 

Example: How Interest Rates Work 

Let’s say Sipho buys a new GWM Tank 300 for R800,000 over 60 months with no deposit. 

Scenario	Interest Rate	Monthly Payment	Total Paid
Excellent credit (Prime%)	10.5%	±R17,200	R1, 032,000
Average credit (Prime + 2%)	12.5%	±R17 900	R1, 073 000
Poor credit (Prime + 6%)	16.5%	±R 19 500	R1, 168 000

Over the term, a difference of just 3–6% in interest can cost over R 40,000 – R 140 000 extra — that’s why maintaining a good credit record is so important! 

 

Real-Life Example: Smart Finance Decisions 

Example 1: A young professional buying her first car
Nandi, a 27-year-old engineer, finances a Haval Jolion Premium for R399,000 with a R40,000 deposit and a 15% residual. She opts for a linked interest rate because she expects the Reserve Bank to cut rates in the coming year. Smart move — her payments drop slightly when the prime rate falls. 

Example 2: A business owner upgrading a fleet – we don’t have this available, should we include this in the article?
Johan owns a construction company and finances five GWM P-Series single cabs through his business. He opts for a 48-month lease agreement, taking advantage of tax deductions and flexible ownership terms at the end of the lease. 

 

Don’t Forget Insurance and Add-Ons 

Every financed vehicle must be comprehensively insured — it’s a condition of your finance agreement. At GWM Edenvale, we can help you with a range of options to better protect yourself and your motor vehicle: 

• Compare insurance quotes, shortfall cover and credit life cover 

• Upgrade your service plan to maintenance plan, extend your service plan, insure your tyres against potholes, and insurance for those small dents and scratches that decreases your vehicle’s trade-in value. 

• Protect your finance with credit life cover (in case of retrenchment, disability, or death) 

 

Final Thoughts: Drive With Confidence 

Financing a car doesn’t have to be complicated — especially when you have the right team guiding you. As the Finance and Insurance Manager at GWM Edenvale, my job is to make sure you understand your options, get the best possible rate, and drive away in a vehicle that truly suits your needs and budget. 

Whether you’re looking for a Haval, Tank, P-Series, or Ora, we’ll try our best to find a suitable finance plan that makes sense today — and tomorrow. 

 

Get in Touch 

Ready to explore your options? Visit GWM Edenvale or contact our F&I team for personalized finance advice and a quick pre-approval assessment. 

E-mail us at:  finance@gwmedenvale.co.za or contact us on (011) 452-4410 

GWM Edenvale – Drive Better. Finance Smarter.