MY WIFE has been shopping for a car lately and we want to ask how the deposit affects one's monthly repayments.
Is it mandatory to fork out a deposit on cars over R80,000 and into whose pocket does the deposit go? We've heard stories that the salesperson will sometimes pocket the cash. - Magosi, Germiston
ROAD RAVE REPLIES:
Magosi, a deposit reduces the actual amount you are borrowing from the bank in a hire-purchase deal.
A smaller loan means smaller monthly repayments.
To illustrate the effect, suppose you buy a car of R100000, put down a deposit of R20000 and agree to pay off the balance over 54 months.
Your monthly instalments, including bank fees but not insurance, will be roughly R2130, depending on the interest rate.
That amounts to R135020 that you will have paid after 54 months for the car costing R100000 initially.
If you buy the same car without putting down a deposit (a deposit is not mandatory by law, though the bank might insist on one before granting a loan), the repayments will be roughly R2640 over the same period of 54 months and at the same interest rate.
In this case you will have paid R142560 for the same car at the end of 54 months.
A salesperson pocketing a deposit would be a case of theft, plain and simple.
Always insist on an official receipt from the dealer, issued there and then, when you hand over a deposit.
How does the deposit affect the installments?
MY WIFE has been shopping for a car lately and we want to ask how the deposit affects one's monthly repayments.
Is it mandatory to fork out a deposit on cars over R80,000 and into whose pocket does the deposit go? We've heard stories that the salesperson will sometimes pocket the cash. - Magosi, Germiston
ROAD RAVE REPLIES:
Magosi, a deposit reduces the actual amount you are borrowing from the bank in a hire-purchase deal.
A smaller loan means smaller monthly repayments.
To illustrate the effect, suppose you buy a car of R100000, put down a deposit of R20000 and agree to pay off the balance over 54 months.
Your monthly instalments, including bank fees but not insurance, will be roughly R2130, depending on the interest rate.
That amounts to R135020 that you will have paid after 54 months for the car costing R100000 initially.
If you buy the same car without putting down a deposit (a deposit is not mandatory by law, though the bank might insist on one before granting a loan), the repayments will be roughly R2640 over the same period of 54 months and at the same interest rate.
In this case you will have paid R142560 for the same car at the end of 54 months.
A salesperson pocketing a deposit would be a case of theft, plain and simple.
Always insist on an official receipt from the dealer, issued there and then, when you hand over a deposit.
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