What if I can’t afford my car?

IMPORTANT: CONSIDER FULL COST OF OWNERSHIP

Not paying your instalments is a breach of contract and may lead to your car being repossessed.

Vehicles are entrenched into our daily lives. This makes it understandably heart-breaking if that relationship has to prematurely end when you are no longer able to afford your monthly repayments.

Consumers should consider the full cost of vehicle ownership and always build in a buffer to cater for rate, fuel and maintenance fluctuations.

Those buying used or second-hand cars must consider the benefit of obtaining extended motor plans. If you don’t have a motor plan and the car experiences an expensive mechanical fault, you’ll need to fund this yourself.

You still need to honour your monthly vehicle instalment if your car is non-operational.

Here are some tips to consider:

Speak to a financial advisor at the bank where your car’s financed. Banks have experts on hand to best advise you on what options are available, depending on the vehicle finance plan and additional products and services you selected.

Value-added-products may provide relief.

Most banks offer additional products and services such as credit protection that help protect your vehicle finance agreement and minimise potential risks.

Credit protection covers eventualities such as death, permanent and temporary disability, dread disease and retrenchment – depending on the option selected.

If you have a value-added product or service in place, your advisor will help you understand what it covers and what options are available. A mechanical warranty product will contribute towards mechanical failure if there’s a policy in place.

Cut out non-essentials. Go through your monthly budget item-by-item.

If you don’t put your budget down on paper, there are templates you can download that will make it easy for you to track your monthly debit orders, spending and other deductions.

Seeing it in black and white will help you visualise what’s coming in/out of your account and you’ll be able to determine where you can make changes or cut out unnecessary costs and redirect them to better use.

You can trade in for a more affordable car or sell your car.

Go to a reputable dealer to get the trade-in value or negotiate the sale of your vehicle. This will help you determine what other vehicle is a more realistic option in your price range or else provide a cash injection to ease financial pressure.

Look at selling your car through your bank. You can sell your vehicle privately through online platforms, auctioneers and others – but this comes with considerably higher risks, particularly fraud, in the event that your account isn’t paid up. You’ll still be held liable for vehicle instalments.

Refinance your vehicle. If the settlement value of your car is higher than the trade-in or market value, your next step is generally to consider extending the payment period of your loan.

Charl Potgieter is head of personal markets at Absa

Banks have experts to best advise you