Buying a car is an exciting moment in your life. An important aspect of the car-buying process and financing a car is paying a deposit on your car. This initial payment can help you manage your monthly car finance payments more effectively.
In this article, we explore why protecting the deposit you paid on your car is important. Whether you’re a first-time car buyer or looking to upgrade your ride, understanding the benefits of protecting your deposit can save you money.
Why should you pay a deposit on your car?
A car deposit is an upfront payment you make when financing a vehicle. You may have saved up for a deposit, or perhaps traded in your previous vehicle. This lump sum payment is paid to the dealership when you secure your vehicle finance. Paying a deposit can have several benefits, including:
- Lower interest rates: Your finance house may give you lower interest rates if you pay a large deposit, as it reduces their risk. You’ll pay less in total interest over the life of the loan compared to financing without a deposit.
- Reduced monthly instalments: Paying a deposit means you need to borrow less money. For your budget, this translates to lower monthly repayments.
- Quicker loan approvals: A larger deposit can strengthen your loan application, making it more likely to be approved quickly and with favourable terms.
How much do you need for a deposit?
Paying a deposit is not always a requirement for financing a car. Many dealerships and lenders will allow you to finance the entire purchase price. It is, however, recommended that you put down as large a deposit as possible, as this will benefit you in the long run. At a minimum, you should try to pay at least 10% to 20% of the vehicle’s total cost as a deposit.
Consider how much you can afford to pay upfront without compromising your financial stability. Paying a higher deposit can help to reduce your monthly payments. Some lenders may have specific requirements for the minimum deposit amount. It’s important to check with your lender to understand their policies.
Why should you protect your deposit?
What happens if your vehicle is stolen or written off tomorrow? Without any financial protection in place, you’re facing a considerable financial loss. You may lose the money you worked so hard to save. That’s why you need deposit insurance. Deposit insurance gives you the right protection against losing your hard-earned money. If your vehicle is written off or stolen before you’ve completed your finance agreement, your deposit insurance will cover the gap. You won’t be left bearing the full brunt of the loss. Deposit Insurance also pays out, no matter what your comprehensive insurance policy pays. This gives you additional financial flexibility. You can use this to put down a deposit on a new vehicle, or pay off debt. Deposit Insurance is also far less expensive when compared to trying to replace your deposit. Deposit Insurance gives you the assurance that, no matter what happens to your vehicle, your finances – and your next vehicle deposit – are secured.
Luckily, if you have Car Deposit Insurance from Bidvest Insurance you don’t have to worry about losing your hard-earned cash.
Protect your deposit with Car Deposit Insurance from Bidvest Insurance
Car Deposit Insurance is a type of insurance that protects the deposit you paid when buying your car. If your vehicle is stolen or written off, you won’t lose your deposit. This ensures you suffer no loss and that you’re able to put down a deposit on your new car.
Benefits of Car Deposit Insurance
With Car Deposit Insurance from Bidvest Insurance, you get:
- Full deposit coverage: Should your car be stolen, hijacked, or written off, your Car Deposit Insurance will cover the deposit you paid towards buying your car. Deposit protection has a limit of R300,000.
- Loyalty bonus: R10,000 towards the purchase of a new vehicle at a Bidvest Insurance Approved Dealer.
- Instalment protection: Should your claim with your underlying insurer take more than 60 days, we will pay your monthly car instalment up to R5,000 for up to 3 months.
There’s nothing worse than losing money, especially when it comes to the deposit for the car you saved tirelessly for. Car Deposit Insurance protects your deposit should your car be stolen, hijacked, or written off. Complete the form below to get Car Deposit Insurance from Bidvest Insurance.
