Getting a Car in Joburg: What’s the Ideal Credit Score for Vehicle Finance
Buying a car in Johannesburg often requires vehicle finance, and understanding your credit score is crucial to securing a good deal. Your credit score reflects your financial reliability and influences whether lenders approve your application and at what interest rate. This guide explains the ideal credit score range for car finance in South Africa and offers tips to improve your chances.
ALSO READ: How to Improve Your Credit Score: A Comprehensive Guide
What Is a Credit Score?
A credit score is a numerical value, typically ranging from 300 to 850, that indicates your creditworthiness. It is calculated based on your borrowing history, repayment behaviour, outstanding debts, and the length of your credit history. Lenders use this score to assess the risk of lending to you.
Minimum Credit Score Needed for Car Finance
In South Africa, most lenders require a minimum credit score of around 600 to approve car finance. Scores below this threshold make it difficult to secure finance, or you may face higher interest rates and stricter loan conditions.
- Below 600: Considered high risk; approval is unlikely or comes with very unfavourable terms.
- 600 to 649: Subprime category; finance possible but with higher interest rates and potentially larger deposits.
- 650 and above: Good chance of approval with better interest rates and terms.
Ideal Credit Score Range
For the best chances of approval and favourable loan conditions, aim for a credit score of 670 or higher. Scores between 670 and 739 are generally regarded as good, while scores above 740 are very good to exceptional, often attracting the lowest interest rates.
| Credit Score Range | Description | Likelihood of Approval and Interest Rates |
|---|---|---|
| 300 – 579 | Very Poor | Highly unlikely to get finance approval |
| 580 – 669 | Fair/Subprime | Possible approval with higher interest rates |
| 670 – 739 | Good | Likely approval with competitive interest rates |
| 740 – 799 | Very Good | High approval chances and lower interest rates |
| 800+ | Exceptional | Best rates and easiest approval |
How Credit Score Affects Interest Rates and Payments
Your credit score directly impacts the interest rate you receive. For example, as of 2024 data:
- Super prime (750-850) borrowers may get rates around 9.5%
- Prime (700-749) around 11.75%
- Nonprime (650-699) about 14%
- Subprime (600-649) roughly 17.5%
- Deep subprime (<600) can face rates above 21%
Higher interest rates mean larger monthly payments, making your car loan more expensive over time.
Checking Your Credit Score
Before applying for vehicle finance, check your credit score through free services such as:
These platforms allow you one free annual check. Monitoring your score helps you understand your credit health and prepare for loan applications.
RELEVANT ARTICLE: Can You Get A Loan With Bad Credit? Here’s What You Need To Know
Tips to Improve Your Credit Score
Improving your credit score can increase your chances of approval and secure better loan terms. Consider these steps:
- Pay all bills and credit accounts on time.
- Reduce outstanding debts, especially credit card balances.
- Avoid multiple credit applications in a short period.
- Review your credit report for errors and dispute inaccuracies.
- Maintain a healthy mix of credit accounts and keep older accounts open.
What If You Have a Low or No Credit Score?
If your score is below 600 or you have no credit history, options include:
- Applying with a co-signer who has a better credit score.
- Making a larger down payment to reduce lender risk.
- Considering secured credit products to build credit before applying.
- Exploring lenders specialising in bad credit finance, though expect higher costs.
For vehicle finance in Johannesburg, aim for a credit score of at least 600, with 670+ being ideal for better loan terms. Knowing your credit score and taking steps to improve it can save you money and stress. Always compare loan offers from multiple lenders to find the best deal suited to your financial situation.
