How will you finance the car you want?

car, finance, buying a car, vehicle finance, dealership

How many cars do you think are registered on South African roads? Three million…four… nope, approximately 12 million cars!

And if you’re reading this then you’re probably thinking of making the circle bigger by getting yourself new wheels. As exciting as getting yourself a car may be, not many of us can actually afford to buy a car for cash upfront.

Just like the 2 million cars that are already financed in Mzansi, finance is probably big on your agenda. Just because times are a little tough at the moment, it doesn’t mean you can’t get yourself new wheels.

Take a look on OLX, who knows, you might just find what you’re looking for.

 Budget realistically

After the budget speech last month, VAT will rise from 14 to 15 percent for the first time since 1993; personal income tax will go up, and fuel levy will increase by 52 cents. So do yourself a favour and get familiar with your finances before you decide to buy and finance a car.

When looking into finance, take the total cost into consideration. Consider any extra costs you may have to foot for when purchasing your car such as dent protection, service plans, insurance, and the warranty that you’ll have to factor into your budget.

No matter how badly you want new wheels, don’t make the mistake of getting stuck financing a car beyond your means. We all want to thrive and drive the 2018 model of our favourite car, but be realistic about what you can afford and stick to your budget.

Be savvy with your money

Year on year, we’re all constantly looking for cheaper cars or we hold on to their cars for longer than we want to. TransUnion publishes a quarterly report, the Vehicle Price Index (VPI) which analyses monthly data it receives on sales from dealers, vehicle financiers and banks throughout the country.

The VPI shows that vehicle financiers are financing 2.22 used vehicles for every single new vehicle bought, and the average used car loan is around R234 000.

Did you know that the average age of cars sold on OLX is 11 years, and the average price of cars listed in 2017 was R100 000?

Our top 5 cars under R100 000 are:

  1. VW Polo
  2. VW Golf
  3. BMW 3 series
  4. Toyota Corolla
  5. Opel Corsa

Like the People’s Side Bae says, being financially challenged is now fun. Saving is tough, but try to have a deposit that is at least 15% of the value of your car. The lower your loan amount, the better for you. Plan well in advance because this will reduce your monthly payments and possibly the repayment term. To help you reach that saving target faster you could set yourself economically free by selling your unused goods on OLX.  

Do your research

Do some thorough research before deciding on the car you’d like to buy, just because it looks good on the exterior, it doesn’t mean it is. Make sure you inspect the car and take it for a spin to get a feel of it.

As a buyer, you’re looking for the maximum amount of value from a car for the minimum cost, so learn to negotiate. Everything is negotiable, yes everything. Talk to the dealer or seller about getting an all-inclusive deal.

Think about choosing between a fixed or variable interest rate, because economic conditions will play a big role in rising interest rates and your monthly repayments. The interest rates on your repayments will affect your budget in the long run, because the longer you take to repay your loan the more interest you’ll pay.

Make sure to be sure savvy with your decision about your repayments, pay a little extra every month if you can, it’ll add up in the long run. The sooner you pay off your car, the better.  

Don’t be afraid to ask questions

After you’ve done the necessary research and have settled on which car you want, make sure to deal with a professional consultant. Make sure they’re registered with the National Credit Regulator (NCR), work within the National Credit Act (NCA) and Financial Advisory and Intermediary Services (FAIS) act.

If all is in order the next step is to read the fine print and make sure all the paperwork is in order.

Ask questions about everything you need clarification on before you sign anything, remember a contract is legally binding.

Happy driving!

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