FINANCING A CAR AS A FOREIGNER IN SOUTH AFRICA- MY PERSONAL EXPERIENCE

Disclaimer, I don’t consider myself an expert. I suggest you consult experts such as a financial advisor, vehicle dealers etc. I am writing this from my own personal experiences. I worked for almost 10 years in the insurance industry in Zimbabwe handling motor insurance among other classes of insurance including underwriting and claims as an underwriter, claims examiner, Insurance broking junior manager (account executive), underwriting manager, client manager and branch manager. I also worked for 10 years in South Africa doing motor insurance for both personal and business and I also briefly worked as an Acting-Team Manager Motor Insurance Claims. For the last 17 months I have been doing mainly personal insurance non-motor insurance insurance claims with occasional motor theft claims that accompanies a home robbery. As part of my Insurance Associateship examinations with the Insurance Institute of South Africa in 2003 I did major in motor insurance. For my Fellowship examinations in 2005 I studied Risk Management that also helped me to run self-insurance products especially Aggregate Excess that big fleet owners rely on to manage vehicle insurance risks. I also graduated with a Bachelor of Accounting Sciences degree.

This morning, I posted on Facebook about my experience in financing my very first car when I arrived in South Africa in 2007 and a few of the challenges I faced. It dawned on me that a lot of foreigners are facing the same challenges I faced when I arrived in South Africa in 2007. Generally in South Africa credit is well regulated and one finds that it is cheaper to finance a car in South Africa than say in Zimbabwe. In South Africa you can finance a car at an annual interest rate of less than 10%. Given the fact that South Africa does not allow one to import cheap Japanese used vehicles like most other SADC countries, vehicles are generally expensive in South Africa. If you are looking for a vehicle that is less than 5 years old, it might be difficult to buy it cash due to the huge cost. Also when one’s work permit has expired your country of origin may allow you to bring in your vehicle duty free and this is a huge incentive for Zimbabweans where custom duties for private vehicles and double cab bakkies is almost 100% of the value. A person should finance a vehicle with a reasonably high value if the intention is to utilise the returning resident duty waiver. Generally a used South African assembled vehicle fetches a higher value in Zimbabwe due to the availability of spare parts in South Africa.

We all know that South Africa has one of the highest rates of fraud and car thefts in Southern Africa. For that reason I prefer buying a vehicle on finance than cash, however I have bought two vehicles cash from people I knew personally. A vehicle finance company will not pay over the amount to the vehicle dealer unless the vehicle’s paperwork is in order. That way you protect yourself from many risks such as buying a stolen car or a rebuilt car code 3 (I will explain later what this means). If you are a foreigner like myself, you will occasionally drive the vehicle across the border and at the border they will always check your vehicle on both sides of the border to see if it was tampered with or whether it was stolen. It is also not advisable to permanently bring in a foreign registered vehicle as that makes you a target. I know a few friends who lost or there was attempted theft and damages to their foreign registered vehicles in South Africa. A few years ago my sister and my brother in-law had their Zimbabwean registered Toyota Landcruiser Prado stolen from a hotel in Kempton Park. When we viewed the CCTV footage it was clear that the security guard was involved as you could see him clearly allowing the thieves’ vehicle to block the boom whilst the Prado passed through at the same time.

Before you finance a car you will need credit references. So you will need to open an account e.g. a clothing account. Because most foreigners don’t have a South African ID number that is used to show your credit profile hence credit references will be vital. You will need to get an International Driving permit. If you are in Zimbabwe you need to go to AA Zimbabwe with your original Zimbabwean drivers’ licence and two passport photos and you need to pay a fee and they will issue you with an international driving permit that is normally valid for three years. The vehicle finance company will only consider the International Driving Permit and not your original licenced issued in your country of origion. In South Africa you need to go to the licensing department at selected offices and apply for a traffic register number. You will need your passport together with the valid work permit, proof of address and two passport photos. In South Africa your vehicle and your driver’s licence if you wish to take a South African driver’s licence is linked to your South African ID. Now as a foreigner without a South African ID number, your traffic register number is like your ID number for traffic purposes.

I always find it easier to first apply for finance directly through the bank and once I get the approval, I will then approach a car dealer. A lot of car dealers are clueless when it comes to vehicle financing for foreigners. Luckily some big dealers have bank employees based on their sites. Some vehicle finance companies don’t give vehicle finance to foreigners. You will also need to purchase comprehensive insurance. On insurance I refer you to this blog I wrote 2 years ago (

http://kanyokad.blogspot.com/2017/10/response-to-nicolette.html) I will add again that it is imperative that you answer all the insurance questions truthfully and disclose that you are using a foreign driver’s licence. If you had insurance cover in your country before you came to South Africa mention it also to your insurance company as they can consider this experience for the purpose of giving you discount on your insurance.

Some useful hints

If you intend to utilize the returning residents duty waiver option, make it a habit to always ask custom officials on what is required. I have leant that every time you have your passport stamped make sure sure you ask the immigration officer to stamp your passport correctly when entering Zimbabwe, they are quick to stamp and initial R/R meaning Returning Resident. You need to make sure that if you have a permit every time you enter Zimbabwe you ask the official to write the number of days you will be in Zimbabwe and not to initial R/R because the day you decide to utilise the duty free option you might run into troubles with the custom officials as they will ask to go through your passport to make sure that you did not utilise the benefit in the recent past.

In South Africa almost 99,9% of all the vehicles are either made in South Africa or were first registered brand new in South Africa. Once a vehicle has been used it becomes a code 2 vehicle. Should that vehicle be involved in a serious incident it can be de-registered. Some people will buy those vehicle and repair them and even after it has been repaired it will become a code 3 or Rebuilt. When you are buying a vehicle for cash always check on this status because if it is a Rebuilt vehicle insist on a discount because in the event of a total loss claim, your insurance company may only pay you say 70% of value. Also check the date of Liability on the registration documents as a lot of people will misrepresent the year when the vehicle was first registered. Imagine if you buy a vehicle that was misrepresented by the seller as 2015 and it turns out it is a 2012 model. Not only will you have have paid an inflated purchase, you would stand to lose out should you want to resale the vehicle or should you have to make an insurance claim in the event your vehicle is stolen or damaged.

I hope this helps.

Cheers.