Vehicle Financing Without a Credit History

You’re young, adventurous, and seeking independence. You would like your own set of wheels but are uncertain how to buy a car as you haven’t yet built up a credit history. Here are some options:


When you purchase your first car you may need assistance from a blood relative who is willing to stand surety for the vehicle loan from a bank. Suretyship is specialised insurance and takes place when a person guarantees the performance of an obligation by another. For example, if a parent stands surety for a child, the parent guarantees that the child will perform payments regularly and on time.

Typically, parents would have built up their own credit history along with some assets, which banks use as security for a loan. As they are most likely to be prepared to help their children get on their feet, they are often the ideal surety for a young person’s first vehicle finance transaction. The bank will assess both your parents’ and your financial affairs before granting a loan. If you fail to meet your loan obligations after the loan has been granted, the bank will hold the person signing surety, in this case, your parents, responsible for the debt. That’s why it is important for you as a young person to budget carefully for your new vehicle by taking into account:

• Loan repayments – Capital sum, interest, and fees

• Vehicle insurance – All young car owners should have comprehensive cover By buying your first vehicle, even with the help of a surety, you will start building your own credit history which will be a positive future asset if handled correctly.

Shop Around

Always shop around for the best vehicle finance and trade-in deals before you make your final decision. This is especially true if you have a trade-in on your purchase. The price dealers offer for trade-ins vary considerably depending on their stock levels and perceived ability to sell your trade-in.

Vehicle Finance for Graduates

Body If you have already made in-roads in building your future and completed tertiary studies, you may qualify for favourable interest rates or even vehicle credit in your own name. Research the options provided by South Africa’s leading financial institutions and select the one that best meets your financial and life circumstances. Here are some offers made by banks to help young, qualified people finance their first vehicle:

• Standard Bank – Prime less 0.25%

• Absa bank – Prime less 1%

• Investec – Developed a package for top-earning graduates to meet their banking, financing and wealth management aspirations.

• Nedbank – Provides the Professional Banking package for under 30s with a four-year degree. Through this product bundle, young people are given a 50% reduction in banking fees and assigned their own personal banker to help them with vehicle and other asset financing.

• Wesbank – The Wesbank Graduate Finance portfolio was launched in partnership with leading service providers to enable graduates with no credit history to buy a car. Graduates from various institutions are given competitive interest rates and tailor-made packages on selected car models.

When giving serious consideration to buying your first car, visit your local Auto Pedigree dealer for advice on suitable vehicles and financing options.

Disclaimer: This information is for educational, or entertainment purposes only. We do not make any warranties about the completeness, reliability, and accuracy of this information.