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Listen: Advance payments on your car finance

Oct 25, 2021

We did this podcast a year ago, about paying off your vehicle and home loan sooner – but I thought it was worth sharing again, as Absa has now released updates on its banking app for car finance.

Absa car finance customers can use the app to pay in additional funds to settle their balloon payment –which is pretty cool. This is an excellent way to settle your balloon payment while you are paying off your car finance, so that when you come to the end of the finance term, you do not owe a lump sum.

The app shows your current outstanding balance plus the amount you have paid in advance – basically the amount over and above your agreed repayment amount.

You can then select to transfer the advance by specifying that you want this additional payment to go towards your balloon payment. If you do not have a balloon payment you can opt to rather use the advance payment to lower your monthly installment.

At this stage the app does not allow you to use your additional repayment to reduce the term of the loan, as this requires a change to the actual contract. This can only be done via the call centre.

It is worth noting that even if you do not transfer the advanced amount towards the outstanding balance, you are still benefiting by not paying interest on the full loan amount.

For example if your ‘Current Balance’ shows as R363 000 and your ‘Advance Amount’ shows as R20 000, you earn interest on the advance amount at the same interest rate you pay on the current balance. This means the advance amount interest offsets the interest paid on R20 000 of your current balance.

On the app the ‘Estimated Settlement Value’ includes the advance amount which would then be R343 000.

Another way to pay your car finance off sooner is to set your debit order amount to be higher than the agreed instalment.

Again, this cannot be done on the app and requires the customer to call in and ask for the debit order to be different from the instalment amount.

“It does require the customer to also keep an eye on the instalment amount when interest rates increase since it can exceed the debit order amount and the account might go into arrears, ” says Faisal Mkhize, managing executive at Absa Vehicle and Asset Finance.

“The benefit of keeping the instalment and debit order amount the same is that the debit order will always adjust to the correct instalment amount automatically when there are interest rate changes.  Additional amounts can always be paid in via EFT or by setting up scheduled recurring EFT payments on the app.”


  1. What is the benefit of paying more towards the car monthly installment when you are on debt review with banks for the next 3 years?

    • You pay off the debt quicker and are able to exit debt review sooner

  2. Good morning, can I pay my monthly installment on my vehicle in parts during the month. For example
    Installment R 4000 pm
    Middle of month I pay R2000 and end of month
    I pay R 2000 thanks zarius

    • As long as the full payment is made by due date – but also check with the finance house. It may confuse their system?

    • Good day
      My car balance showed R83700 with advanced amount of R3000 today when I checked the app the advanced amount was not showing anymore and my balance had increased to R86700. What could be the cause?

      • Have you asked the bank? Which banking app is it? Given that it is the end of the month it could be linked to your next installment – the balance may rise at the end of the month with interest etc, but best to check with the bank.


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Maya Fisher-French author of Money Questions Answered


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