A motor plan gives consumers peace of mind knowing they have some cover for unexpected moments. – Vishal Premlall, Director of South Africa’s Motor Industry Workshop Association
Buying a car never loses its thrill. It’s even more exciting if it’s your first. But you’ll have to consider some important issues before you hand over your cash. We got advice from two car-industry veterans: Vishal Premlall, the Director of South Africa’s Motor Industry Workshop Association (MIWA) and Nelis van der Merwe, General Manager: Market Toyota Tokai & Claremont.
How will you pay?
One of the first steps of the car-buying process is working out what vehicle you can afford . Look at your budget to see how much you'll spend on car repayments. Monthly repayments aren’t the only costs to worry about, and your budget needs to reflect that.
Other costs include:
- Car insurance: Make sure you shop around for the best deal. Many insurance packages include extras such as roadside assistance, so work out if you need them when choosing the insurance company.
- Fuel: Your monthly fuel bill can become expensive so consider the car’s fuel efficiency when you’re deciding what to buy.
- Licence fees: This is an annual cost of a few hundred rand.
- Maintenance costs: If you haven’t taken out a motor plan, you’ll have to budget for regular services, as well as less regular costs such as new tyres and wheel balancing.
You’ll need to organise credit, which is offered by car dealerships and banks, so shop around for the best offer first. Once you know how much you have, you can start looking for the car that suits your budget. Vehicle finance means that the car is only yours after your last repayment. It’s also more difficult to get car finance if the car you’re choosing is older than 10 years. If you choose a personal loan to pay for the car, it will be yours immediately.
New vs used
Your budget will tell you what price range you can look at, and whether buying new or used makes the most financial sense.
New cars are appealing because they’ve never been driven by anyone else, and you’re guaranteed of a “clean” history. Consumers have historically chosen new over old because of this, says Vishal Premlall.
On the other hand, says Nelis van der Merwe, buying used often means “you can buy a better model or an upgrade of the new vehicle you were going to purchase, because the first owner took the biggest depreciation”.
Premlall agrees: “If you do enough research ahead of the purchase, there is a tremendous amount of value in a used car.”
When buying used, consumers can choose between buying from a dealer or privately. Both have their advantages. According to Van der Merwe, buying from a reputable dealer offers the customer guarantees or recourse should something go wrong. On the other hand, buying privately can cut costs. The internet offers specialised car-sales sites, but general classifieds websites such as Gumtree also list cars for sale.
Your used-car checklist
Here are some of the key questions you need to ask when buying a used car, either from a dealer or a private seller:
- If buying from a dealer, is it reputable and does it belong to the Motor Industries Federation (MIF)?
- What type of warranty do they offer?
- Are there any warrantees and guarantees still available on the car and will this transfer on change of ownership?
- Is it being sold for a fair price (use the internet to do some research)?
- Is there an authentic service history available that can be verified?
- Can you test drive the car?
- Has the vehicle been in any accidents? Does the car have a low mileage?
- Is the mileage on the odometer correct and can it be verified?
- When last was the cambelt changed?
- Is there a mechanical report on the car? (If not, consider doing one before the transaction is concluded.)
- Are there signs of oil leaks and rust?
- Are there dashboard cracks? (This could indicate that the car has been standing in the sun, and might mean that the other rubbers – such as window rubbers – are also damaged.)
You'll find a downloadable version of this list at the end of this article.
You can also take the car to a third party to have it checked out. “There are many reputable organisations that can produce detailed reports on vehicles at a cost. One can also call on a MIWA workshop for advice and, if required, a mechanical report,” says Premlall.
Merits of a motor plan
Consumers often have the choice of purchasing a motor plan when they buy their car – but is it worth it?
“A motor plan gives consumers peace of mind knowing they have some cover for unexpected moments and is always a good consideration at point of sale,” says Premlall.
He offers this important tip for buyers: “If you are buying a motor plan, and can afford to pay cash, then do so – otherwise you finance the motor plan cost for the duration of the finance period of the vehicle.”
He also adds that consumers need to make sure they “understand what the motor plan covers and the extent of the cover”. They also must take time to research all the different options that are available.