South Africa is a wonderful place to live, but given the wide-ranging effects of the VAT increase and consecutive hikes to the fuel price, consumers have to budget more carefully than ever before. What should you bear in mind when buying a car in these cash-strapped times?
What is a vehicle buyer to do in such a tough economic climate? A car is considered one's 2nd biggest financial commitment (after buying a home), so it is safe to say that you need to put a huge amount of thought into it before taking the plunge. It’s no longer a case of “I just want a new car,” it’s more about what you can afford that meets your requirements.
The first thing a buyer needs to do is understand what exactly is involved in buying a car. Unfortunately, more often than not when it comes to a buying a car, customers are driven by emotions, but in these trying times, you will need to leave vanity and brand loyalty at the door and "put your rational, responsible adult pants on".
1. What’s your budget?
Budget for more than just a car's asking price. Don’t try to work it out in your head, use a calculator and write down all the costs so that you'll know how much you can afford to spend upfront and every month thereafter... keep in mind on-the-road-costs (registration, licencing, 'plates), how much you're likely to spend on fuel given the distances you travel (use vehicles' claimed consumption figures to calculate it), insurance premiums, maintenance costs (such as services (if not included) and tyres) and any unforeseen costs that you might incur.
2. New or used?
Now that you have your budget in mind, you can decide whether a new or used car will be your best option. There are pros and cons to both so you need to do your homework first. The benefit of buying a new car is that you get the maximum extent of warranty and service/maintenance plan cover from a franchised dealer network and that your vehicle is (or should be) unblemished. However, even if you can secure trade-in assistance or a discount on a vehicle, new car prices are prohibitively expensive for some consumers. If you buy a used car, you are likely to make a significant saving because vehicles' first buyers absorb the biggest knocks in value depreciation... However, a second-hand car purchase requires a prospective buyer to carefully check and consider a vehicle's condition, including ownership- and after-sales histories, plus you may need to budget to bear maintenance and servicing costs sooner.
3. Be practical
This is where you will need to keep your emotions in check. Buy with your head and not your heart. You might have your eye on a sexy 2-seater sportscar or an older premium brand product, but does it make practical sense, even if you can afford it? Write down what your requirements are, like notable off-road ability, additional seating capacity or sizeable luggage space, and leave the "nice-to-haves" (such as 4 USB ports and 8-inch touchscreen infotainment system) off the list. Planning to buy a car is not all that different to preparing for a shopping trip: make a definitive list of what you need, make sure you get those things before you spend extra money on anything else and shop around to ensure you get the best price.
4. Keep an open mind
Perhaps you have owned a vehicle/s from Brand X only and, having had good ownership experiences with the car/s, are reluctant to change brands. Maybe you hold a steadfast belief that Brand Y is the most reliable manufacturer and you're unwilling to consider a car made by any other brand. However, there are many manufacturers that offer great products at great deals with excellent warranties. You don’t have to compromise on safety or looks because if you do your homework, you will most certainly find a car that suits your image as well as your budget. A good barometer is the Cars.co.za Consumer Awards, which recognises the best vehicles in 13 respective categories, backed by credible consumer input from the Cars.co.za Consumer Satisfaction Survey. which incorporates brand feedback from thousands of owners of vehicles that are less than 5 years old. Click here to visit the #CarsAwards site.
5. Research is key
You really cannot afford to make a bad decision when it comes to buying a car, no matter what your budget is. Do your homework... a lot of homework! Don’t just research the car you might want to buy, but also the different offers out there, such as Cars.co.za's New Car Specials, visit a few dealerships, conduct test drives and ask about deals and upcoming promotions. Also do some research on how much you could possibly get for your current car (if you own one), shop around and negotiate the best deal before making a decision.
6. Insurance hustle
The cost of insurance on specific models can have a dramatic impact on your car-buying decision. There are many factors that influence insurance premiums, including the extent of accident coverage and excess payments, so be sure to inquire from several providers and check the fine print. Don’t take the first deal you’re offered, shop around and only settle on the one that makes the most sense to your budget and your needs. A little bit of hustling goes a long way when it comes to shopping for insurance. Click here to get an insurance quote.
7. Warranty and service planning
Some used cars are still under warranty and might have an active service or maintenance plan as well. If you are opting for a used car, try to purchase one with at least a meaty portion of the warranty and service/maintenance plan still active, every little bit you can save on servicing and maintenance is a bonus. If you are opting for a new car, make sure you have the budget to add a service plan if it does not come standard with the purchase price. Otherwise, if you'd like to purchase a warranty for your car, enquire here.
8. Financing your car
We'd all like to buy our cars with cash, but many of us cannot afford it, so we have to finance our vehicle purchases. Again, make sure that you shop around. Try and choose a short-term repayment plan with the lowest interest rate possible. Be wary of balloon payments, as they can make repayments seem small, but could leave you still owing quite a sizeable amount on your car by the end of your contract. Try to make as big a deposit as you can (ideally anything from 10% to 20% of the purchase price), as this will help lower your instalments.
Car finance – Tips to help you save.
9. Avoid optional extras
If you are buying a new car it might be tempting to add extras such as a sunroof, bigger wheels and a beefed-up audio system. However, you are unlikely to get your money back (even percentage wise) for them when the time comes to sell (or trade in) your car. If anything, prudently specified extras will make your car more marketable for whichever retailer buys it from you, but that won't make a much of a difference in terms of what they'll offer you for your car. Extras push the initial purchase price up; they're “nice to have”, not necessary, features.
There is a lot to consider when buying a car, but the most important tip of all is to do your research! Like the saying goes, “Knowledge is power.” You won’t make a bad buying decision if you know what you are looking for and you know how to get it. Happy shopping!