As a recent graduate who is starting out in their career, there are so many things ahead of you. You can finally make your own financial decisions. But, with that freedom comes responsibility and, most of all, worry, especially if you have had no prior financial responsibilities or didn’t grow up in a family that taught you everything about finances. Let’s see how graduate finance can give you freedom as a recent graduate.
Because this isn’t taught in high school or university, it can be a new territory that you know nothing about. Whether you’re considering moving out and renting a place or purchasing a vehicle, the thought of having a responsibility that big can be overwhelming. But, with proper knowledge and understanding, all these big responsibilities can be manageable and can better your life. For example, a vehicle can simplify your life if you work challenging shifts as a doctor or you need to travel to various locations as an architect.
What is graduate finance?
You may have heard of the term “graduate finance” but aren’t sure what it is. Well, before we go into how this finance option can give you freedom, let’s briefly explain what it is. Graduate finance is a finance option for recent graduates. This option is tailored for individuals who don’t have a credit history as it’s not essential. Graduate finance was designed so that recent graduates could purchase a vehicle, even if they didn’t have any credit history in the past. Lenders will use an affordability check rather than your credit score to determine whether you are eligible for this type of vehicle finance.
Who qualifies for it?
This finance plan is for any student who has graduated in the last three years, has a job or proof of employment, and can afford to take out this loan. As we mentioned, this financing option vets people based on their affordability and not their credit history. If you have a track record, you won’t be pre-selected for graduate finance. However, lenders will use their scorecard and your credit score to see whether you qualify for vehicle financing or not. Keep in mind that the term agreement between a vehicle loan and graduate finance won’t be the same. To increase the likelihood of you getting pre-selected for financing, try and save up for a deposit. While it isn’t necessary to have a deposit down when applying for this loan, it can work in your favour. It shows your affordability, and it can help lower the amount you borrow, which is always beneficial to you.
How graduate finance can give you freedom
Now that we have explained what graduate finance is, read on to see the benefits of graduate car finance in South Africa.
Cost is spread out
As a recent graduate working for an entry-level salary, you need to be savvy with your money. You need to be able to use it for several things, and if you’re the oldest in your family, you may even have family responsibilities such as financially taking care of your siblings and parents. Having graduate finance can allow you to get a vehicle while also ensuring you repay it every month with affordable installments. This allows you to spread out your money on your responsibilities, needs and wants without having to cough up a large sum of money to get a vehicle.
Build a credit score
Building a credit score from scratch can roughly take up to six months. During this time, you may need to take out a store account or credit card to help build a payment history. If you know that you aren’t financially prepared enough to take out a line of credit, this can set you back. Credit cards and store accounts can be beneficial, but it’s also an easy way for you to acquire debt. If you know this might be a debt trap for you, applying for graduate finance can help you build your credit score in a stress-free way, and you can afford to purchase something you need instead of consumable items. Then, once you either have a higher paying job or understand the world of credit, you can opt to take out different lines of credit and continue to improve your score. But, you will at least have built your credit score should you need to apply for a home, personal or business loan in the future.
More options
When you have graduate finance, your options aren’t limited. While you must always choose a vehicle that fits your budget, you still have the option of getting a car in an impeccable condition that can last you for a few years without any hassle. If you don’t have financing options, you would have to save for a while and depending on how much you can afford; you may have limited options. This won’t help you in the long run, especially if you only purchased a vehicle based on how much you can afford rather than which one is best for you. That vehicle may end up costing you more in the end, whereas if you have the funding, you can purchase a vehicle in good shape from a reliable car dealership.
Travel with ease
One of the advantages of car transportation is that you can go wherever you want. This is ideal for someone who is starting a new job. You can travel to and from work without having to worry about your safety or getting to work late as you will be in control of that as much as you can. When you start working, whether it’s in a new city or an area you’re unfamiliar with, having your own vehicle helps lessen the burden and anxiety of being in an unknown area, allowing you to go to work safely.
Final thoughts
There are many ways that driving a car can offer you freedom. But, when you are starting out in your career with no prior credit history, you can get turned down by lenders. This is why graduate finance is so beneficial for recent graduates. Applying and getting pre-selected for financing can help you afford the vehicle you need and ensure that owning a vehicle doesn’t put on a financial burden you cannot handle.
