April 25, 2022
It’s one thing planning to buy your dream car of a lifetime, but it’s quite another about how to finance a new car purchase. Motorists need to know how car financing works and how they can save money by obtaining the best finance deal. Read on how you can address this effectively.1,2
You need to establish the value of your existing car, which is usually offered to the dealership as a trade-in price. Knowing your car’s value will provide you with the confidence to negotiate a fair price. You will also know if the used car you want is overpriced.
Calculate the disposable income left after all your monthly requirements have been deducted from your salary. This amount would then be used for the monthly instalments after buying your car.
This may be obtained from the TransUnion Auto Dealers Guide, which provides the current value of specific models. It will cost a minimal amount to get a report on a specific make you are after.
Concerning the car you want to buy, it will cost you about R100 or more to get this Report, which will show you the car’s model year, how many accidents it’s had and much more.
Carefully ensure that the trade-in figure you have agreed to is correctly stated. The Finance and Insurance Manager of the dealership will try to include in the deal many optional extras such as rust-proofing, upholstery protection and so on. Don’t necessarily accept any of these, as you may well be able to obtain better deals elsewhere. Also, look out for the dealership charging you the delivery fee of the vehicle, which can quickly add several thousand rand to the purchase price of the car. The bottom line is to ensure you know what you are paying for in the end.
Now the time has come to pay – what are the different options?
Most motorists won't be able to pay the car's full purchase price in cash. But using any spare cash from your home loan for a large deposit will benefit you greatly by reducing monthly instalments. Paying cash to a dealership will most likely not earn you a discount. Avoid disclosing to the dealership you are paying in cash, because otherwise, they may not easily negotiate the purchase price.
This is the most usual form of payment and extends over 72 months.
After paying instalments for 60 or 72 months, you will still have to pay, as a lump sum, a balloon payment which is about 30% of the retail price. Avoid this, if possible, because the car is still not yours after paying all these years.
This article can only serve as information because car insurance is not straightforward. If you consider buying a car insurance product, it is safest to consult a certified financial advisor for professional advice.
Once you have launched out after careful preparation to get the best deal and bought a new or used car, it’s vital to take out car insurance. The risk of financial disaster is great when you drive a car with no cover. South African law requires you to take out comprehensive car insurance if a bank will finance your next car. PMD offers affordable, comprehensive car insurance with world-class service and exceptional product benefits such as fixed premiums* and reduce-to-zero excess*. Contact them to find out more. T’s and C’s apply.
November 7, 2023
November 7, 2023