Owning a car is very easy in South Africa as long as your paper work is in order. Buying a car with cash can be way too expensive hence a number banks have defines quite a number of options. This article will focus on Nedbank’s MFC, an option that is designed to gives clients several ways of owning a car.
There are a number of ways to finance your car through MFC. The option you choose will depend on your financial goals and your lifestyle. Here are the options:
Instalment agreement
An instalment agreement is an option that gives clients a financial provision to buy a vehicle that is selected by a client and is purchased by the bank. The bank then sells the vehicle to you over a negotiated period at an agreed interest rate.
Balloon payment
The balloon payment selection offers the benefit of reduced monthly repayments, with a lump sum repayment (referred to as the balloon payment) at the end of the agreement period. At the end of the agreement period, you have the following options:
- Apply to refinance the balloon payment amount for a further period. (Terms and conditions will apply).
- Sell the vehicle.
- Paying the full balloon payment amount and take ownership of the vehicle.
- Rate Payment options
MFC offers you the flexibility to select from one of two rate options:
Linked-rate Option
With the Linked-rate Option, the bank provides you with the impending benefits of intermittent interest rates. In the event that the interest rate increases during the agreement period, your interest rate and therefore your repayments will increase accordingly. The reverse applies if the interest rate decreases during the agreement period: then you will benefit from lower corresponding repayments.
Fixed-rate Option
The fixed-rate option gives clients a peace of mind in terms of fluctuating interest rates. In the event that the interest rate goes high during the agreement period, a customer’s repayments will not be affected in any way and their interest rate will stay the same.
