Vehicle Purchasing Terminology
Vehicle Purchasing Terminology
Buying a vehicle is a wonderful exercise, however, research is necessary to ensure that you are well informed when it is time to sign off on your new vehicle. Part of the research is understanding the terminology of specific words and phrases when shopping around for your vehicle. This is pivotal if you’re planning on purchasing your vehicle through vehicle finance also known as a vehicle loan from the bank. Here we break down some key terms so that your decision-making process is easier.
Balloon payment / Residual
These terms are interchangeable and mean the same thing. It’s a lump sum payment that is made at the end of your final vehicle instalment before taking ownership of the vehicle. Simply put, it's the deposit you pay at the end of the finance agreement term. Make sure you understand the pros and cons of residual values before you decide on this option.
Deposit
A sum of money paid upfront and deducted from the total amount financed by a bank. This amount of money assists in decreasing your monthly instalments as well as your interest rate. The more your deposit is, the lesser your monthly instalments will be as well as interest.
Monthly Instalments
This is the agreed-upon amount between yourself and a bank to pay towards your vehicle loan on a monthly basis. If a deposit was paid upfront, that amount will assist in decreasing your monthly instalment. Hence, it's important to deposit more to pay less monthly where applicable.
Interest
Interest is the amount of money you pay for borrowing from the bank. In other words, you’ll pay the initial amount of money you borrowed plus the interest for borrowing that money. And this must be paid within a stipulated amount of time. There are two types of interest rates vehicle buyers can choose from at the start of an agreement – fixed or linked. Fixed interest means that it will not change nor be affected by external factors like inflation. While a linked interest means interest rates may vary depending on what the bank's prime lending rate is at any given time. And this is determined by the South African Reserve Bank.
Offer To Purchase
This is usually the bulk of the paperwork, It is a contractual agreement between yourself and the bank on the terms of the vehicle purchase. It’s a detailed document on the vehicle, its specs, financing arrangements and terms. You cannot just cancel it without a good reason, so read it carefully and make sure you are happy with your decision to purchase the vehicle.
Warranty
A warranty is the manufacturer’s promise that the machine they’re selling you won’t give you problems, and they’ll cover it if it does. Warranties are usually included in the sale of a new vehicle, but this can be extended or replaced with equivalent coverage when the time comes or when purchasing an older used vehicle.
Settlement
This is the amount you need to pay off the loan and claim full ownership of the vehicle.
NaTIS document
This is the document that shows that the vehicle belongs to you. It will change from the dealer’s name to your name when registration happens, but you won’t get the physical papers until after you pay the vehicle off. Here’s our blog post on everything you need to know about NaTIS documents.
Deal Assistance
Also known as Trade Assistance, is an Auto Pedigree benefit to provide you with the flexibility to structure your payment deal according to your financial needs.
With this in mind, visit any of our dealerships nationwide or browse with ease here.
