'Having a car loan works against you when applying for a home loan'

South Africa has decent roads but lacks good public transport infrastructure.

Many South Africans therefore own a car that they usually finance with debt.

The pandemic has resulted in a marked increase in home loans while vehicle finance is in the doldrums.

Africa Melane asked (on 21 April 2021) financial planner Gerald Mwandiambira for advice on weighing up a car loan versus a home loan.

If you want to buy property, perhaps you should consider doing without a financed car, advises Mwandiambira.

"The number one reason most people are declined when they apply for a home loan is that they’ve purchased a car… If you’ve taken out a car loan… it has a significant impact on affordability…"

- Gerald Mwandiambira, Certified Financial Planner

"A home is an appreciating asset… it’s a much more secure loan from the bank’s point of view. A car depreciates… Home loans are easier to apply for if you don’t have a car loan..."

- Gerald Mwandiambira, Certified Financial Planner

"Having a car loan will work against you when you apply for a home loan… If you’re wondering whether to buy a home or a car; get a home loan first…"

- Gerald Mwandiambira, Certified Financial Planner

Scroll up to the audio player to listen to the interview.