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    bank better, live better

    what you should know before buying a car

    When looking for a car, your main considerations should be reliability and affordability – but bear in mind that repairs and maintenance can also be expensive.

    What to know before buying a car

    In the first article of this 3-part series, we gave you tips to help you work out how much you can afford to spend on a car. Now it’s time to start looking for one! But before you start, remember that a car is not an investment. In fact, the resale value of a new car depreciates by around 15% the moment you drive it out of the showroom. Also keep in mind that if you’re going to have to spend more than 5 years paying off a car, it’s probably too expensive for you.

    Buying a new car

    The biggest benefit of buying a new car is knowing that it is mechanically sound, the body work is intact and it has no wear and tear. Despite the advantages of owning a new car, it does come with a hefty price tag. However, you will also probably be able to drive it for many more years than a used car. So it should far outlive your loan, if you do decide to take one.

    Buying a used car

    Buying a used car is a great option, as long as you do careful research and take it for a test drive to check its performance. The benefit of buying a used car is that you may be able to buy the make and model you prefer at an affordable price.

    Tip: Check the car’s service history carefully. If a vehicle has been serviced regularly, is well looked after and is a reliable make, it should be fine.

    Private sale versus dealership

    There’s nothing wrong with buying a car from a private seller, but be sure to check the vehicle’s background and service history. Dealerships generally offer reliability but can be more expensive.

    Tip 1: Consider paying for an online vehicle check to verify whether or not the car has been in any accidents, may be stolen and what its original factory features were.

    Tip 2: If you buy from a dealership, make sure it’s reputable and preferably registered with the Motor Industries Federation (MIF).

    Tip 3: Ask to see the car’s service book. A car that’s serviced regularly tends to have less mechanical issues and it’s also an indication that the vehicle has been well looked after.

    Paying cash

    If you have the money available, pay for your car in full so that you don’t have to pay off interest over time. If you don’t have the money, use one of the 4 free savings plans you get with your Global One facility to help you save.

    Tip: If you already have a minimum of R10 000 saved, and can wait 6 months or more before you need the funds, you could use one of your 4 free savings plans for a fixed-term savings plan and earn up to 9.15% interest.

    Taking credit

    If you decide to buy a car on credit, make sure you can pay your monthly instalments while also covering the costs of fuel and vehicle insurance. You should also only buy a car on credit if you are certain it will improve your life and help you live better. Capitec offers personal credit up to R250 000 over 1 – 84 months; your interest rate is calculated based on your credit profile. Read more about responsible credit here.

    Important factors to consider in your research before buying a car:

    • Fuel consumption (cars with larger, more powerful engines tend to use more fuel) 
    • Cost of replacement parts • Cost of insurance cover and services 
    • Security (do you have a closed garage or secure parking to keep it safe from theft and avoid rust and sun damage?) 
    • Mileage (lower is generally better, although this also depends on the make and model) 
    • Bodywork (no dents, scratches, cracked dashboard, etc.) 
    • No oil leaks (these indicate mechanical issues) 
    • Has the vehicle been in any accidents and if so, what was damaged?

    Tip: Do some research online to see which vehicles get high ratings and reviews in your price range. There are a number of websites that allow you to compare vehicles side by side in terms of their price, performance, fuel consumption, technical features and other details.

    Action your big goals

    Setting realistic annual goals is a great way to help build the life and career you want. The more practical and informed your approach, the more likely you are to achieve your dreams. We’d like to help you reach at least one goal this year, so we’ve created a 3-part series of handy checklists for 4 major financial goals. Whether you want to save for your education, a dream holiday or buy a car or home, we’ve got you covered. To find out what the first steps are for owning a car, click here. In part 3 of this series, we’ll look at how you can take care of your car and pay it off without defaulting on repayments.

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