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Tips for buying a new or pre-owned car - Media

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Tips for buying a new or pre-owned car

Here are a few tips to savvy car shopping:

Tips for buying a new or pre-owned car

Tips for buying a new or pre-owned car

Buying a new car is a big decision – buying the wrong one can cost you lots of money and turn out to be unaffordable if you don’t have all the information before you take the leap. But if you do research and have an educated approach to car buying you're less likely to make a bad decision, get in over your head financially or have buyers remorse.

Here are a few tips to savvy car shopping:

 

Know your budget

We can't stress this enough – know how much you can afford to spend. This is the single most important bit of research you can undertake, so check and double check, and get advice from the experts. Figure out how much money you have after all your other expenses are paid every month, take into account petrol, insurance and maintenance costs, and set that aside.

A great way to test if you really can afford this is to save this amount for a few months, setting it aside for a bigger deposit.

Once you know how much you can afford to pay as a monthly installment, use a car finance calculator (www.automark.co.za/finance/) to discover how much you can afford to pay for a car. For example, if you can afford R4000 a month on your car repayment, you should look for a car with a price tag of R200 000, unless you opt to use a service like a balloon payment.

Get pre-approval

It is possible to get approval from one of the financial services providers like Toyota Financial Services. This can be done in person or online. Not only does it prevent you from blushes if you try to buy a car you can't afford, but it also can give you some bargaining power with the salesman. It also means that when you spot the exact car you want or a good deal, you won't miss it while you wait for bank approval!

Don't add extras impulsively

When you've chosen your car and are making the purchase, try not to let the salesperson sweet talk you into adding extras that you just don't need – the Recaro seats, the heated seats, the go-faster stripe down the bonnet or the reverse camera on a cat the size of a Toyota Agya…

Not only do these extras bump up the price (which means your monthly repayments might creep out of the affordable bracket) but they also don't necessarily add to the resale value – this is money you will never be getting back!

The same goes for extended warranties – budget for them beforehand or make sure you really need one.

One extra that might be worthwhile is a service plan, if your car doesn't come standard with one: while it works out to a very similar amount as if you paid for your services yourself, it might make budgeting easier. The cost of a service plan is added to the loan amount so you pay for your services monthly as opposed to annually or every 10 000 to 15 000km.

Know about the hidden costs

The price you see on the dealership showroom isn't necessarily the price you pay. There will be a few costs that can add up to quite a bit, so ask the salesperson about this before you sign on the dotted line. There will be an 'on-the-road' fee, which includes licensing your car and which can be a few thousand rand. There will be an initialising fee from the bank, and there will be a monthly admin fee. You can't get away from these fees but you can educate yourself about them and budget for them accordingly.

Know how you want to finance

There are a few ways to finance a car, including using a deposit (usually obligatory), using a balloon payment, Guaranteed Future Value purchases, traditional instalment finance or even lease finance. Chat to a financial services provider about all of these options to see which one will suit your needs and finances best.

Tips for buying a new or pre-owned car

Buying a new car is a big decision – buying the wrong one can cost you lots of money and turn out to be unaffordable if you don’t have all the information before you take the leap. But if you do research and have an educated approach to car buying you're less likely to make a bad decision, get in over your head financially or have buyers remorse.

Here are a few tips to savvy car shopping:

 

Know your budget

We can't stress this enough – know how much you can afford to spend. This is the single most important bit of research you can undertake, so check and double check, and get advice from the experts. Figure out how much money you have after all your other expenses are paid every month, take into account petrol, insurance and maintenance costs, and set that aside.

A great way to test if you really can afford this is to save this amount for a few months, setting it aside for a bigger deposit.

Once you know how much you can afford to pay as a monthly installment, use a car finance calculator (www.automark.co.za/finance/) to discover how much you can afford to pay for a car. For example, if you can afford R4000 a month on your car repayment, you should look for a car with a price tag of R200 000, unless you opt to use a service like a balloon payment.

Get pre-approval

It is possible to get approval from one of the financial services providers like Toyota Financial Services. This can be done in person or online. Not only does it prevent you from blushes if you try to buy a car you can't afford, but it also can give you some bargaining power with the salesman. It also means that when you spot the exact car you want or a good deal, you won't miss it while you wait for bank approval!

Don't add extras impulsively

When you've chosen your car and are making the purchase, try not to let the salesperson sweet talk you into adding extras that you just don't need – the Recaro seats, the heated seats, the go-faster stripe down the bonnet or the reverse camera on a cat the size of a Toyota Agya…

Not only do these extras bump up the price (which means your monthly repayments might creep out of the affordable bracket) but they also don't necessarily add to the resale value – this is money you will never be getting back!

The same goes for extended warranties – budget for them beforehand or make sure you really need one.

One extra that might be worthwhile is a service plan, if your car doesn't come standard with one: while it works out to a very similar amount as if you paid for your services yourself, it might make budgeting easier. The cost of a service plan is added to the loan amount so you pay for your services monthly as opposed to annually or every 10 000 to 15 000km.

Know about the hidden costs

The price you see on the dealership showroom isn't necessarily the price you pay. There will be a few costs that can add up to quite a bit, so ask the salesperson about this before you sign on the dotted line. There will be an 'on-the-road' fee, which includes licensing your car and which can be a few thousand rand. There will be an initialising fee from the bank, and there will be a monthly admin fee. You can't get away from these fees but you can educate yourself about them and budget for them accordingly.

Know how you want to finance

There are a few ways to finance a car, including using a deposit (usually obligatory), using a balloon payment, Guaranteed Future Value purchases, traditional instalment finance or even lease finance. Chat to a financial services provider about all of these options to see which one will suit your needs and finances best.