Most South Africans rely on vehicle finance to purchase their dream car. But what happens if they are involved in an accident and the vehicle is declared a write-off?
Do they continue to pay off a vehicle that’s sitting in a scrapyard? Or are they protected from this kind of financial burden?Is vehicle cover compulsory?
When it comes to vehicle finance, credit providers understand that accidents happen, and they need to protect your interests, as well as their own.
Therefore, credit providers insist that their clients have vehicle cover in place before they get behind the wheel. This prevents both parties from sitting with a loss.
Considering the above example, if your vehicle is written off, you’ll end up paying for an asset you can no longer use. On the other hand, if you’re no longer able to meet your vehicle repayments, your credit provider won’t be able to cease your vehicle for reimbursement.
Therefore, vehicle cover will always be compulsory when you take out vehicle finance. However, in the case of a cash transaction this won’t be compulsory – just highly recommended.
What kind of cover do you need?
Not just any kind of insurance will do when taking out vehicle finance. Clients are expected to take out comprehensive car cover, which includes third-party, fire, and theft cover.
It protects your vehicle when it’s on the road, as well as when it’s stationary, and it will cover any repairs after an accident. On top of this, it may even have the added benefit of covering the cost of your excess.
If you don’t have vehicle finance, you can also take out comprehensive vehicle cover. If you can afford to do this, it will offer the best protection.
However, you can also make use of two other types of vehicle cover.
The first is the third-party cover, which ensures that damages to other vehicles are covered when you’re involved in an accident.
And second is third-party, fire, and theft cover, which covers the same, as well as any damages incurred from fire or theft.
If you’re considering buying a car using vehicle finance, it would be wise to start shopping around for the right cover for you.