The specific credit score required to buy a car in South Africa can vary depending on the lender and their individual lending criteria. There is no fixed minimum credit score that universally applies across all lenders. However, having a good credit score generally increases your chances of obtaining favorable financing terms, including lower interest rates and higher loan approval likelihood.
Different lenders may have their own credit score requirements based on their risk assessment and lending policies. While one lender may consider a certain credit score sufficient, another lender may have more stringent requirements. Additionally, lenders also consider other factors such as income, employment history, debt-to-income ratio, and the specific car being financed.
Credit scores range from 300 to 850. You want to aim for as high a score as possible as a good score will give you a better chance of your loan being approved and at a favourable rate.
Individuals with below-average scores – 581 and lower – are seen as higher risk, therefore obtaining a loan will be extremely difficult or they will have to pay very high-interest rates.
Credit score ranges
1 – 580 = Very high risk
581 – 599 = High risk
600 – 619 = Average risk
620 – 649 = Low risk
650 – 999 = Minimum risk
To improve your chances of securing car financing with a favorable interest rate, it is advisable to maintain a good credit score. This can be achieved by consistently paying bills on time, managing existing debts responsibly, and keeping credit utilization low. Regularly checking your credit report for accuracy and addressing any errors can also be beneficial.
When considering purchasing a car, it is recommended to reach out to multiple lenders or car finance providers to inquire about their specific credit score requirements and terms. This allows you to compare offers and find the best financing option that suits your individual circumstances.