February 17, 2022
Times have been and are continuing to be challenging during the South African pandemic. It is more important than ever for South African motorists' to get the best price when selling their car. Fortunately, prices of pre-owned vehicles are rising because of a higher demand for good-quality cars. Essentially, this has become a seller’s market.1
According to Business Day, TransUnion Africa indicated that the vehicle pricing index (VPI) in August 2021 increased steeply from 1.6% a year before to 4.9%. Due to economic pressure, a continuing trend is that households are consolidating their assets by trading in both their cars for a more expensive car.
To get the best price, you have 2 choices. The one is to sell to a dealer, while the other is to sell privately. Each option has its pros and cons.
Selling your car in this way means you are likely to obtain a higher price, seeing you are cutting out the dealer’s profit. The terms ‘retail’ and ‘trade’ originated from this approach. The ‘retail’ value shows you the average price you could get from selling your car privately. The ‘trade’ value would be the average price a dealer would be prepared to pay.
The challenge with any private sale is taking a long time and much effort. You’ll have to take pictures, send them by email, and wait for potential buyers that may take their time to show interest. Then, add the security risk, where potential buyers may be criminals trying to take advantage of the situation. Finally, you may have to wait quite some time before buyers can obtain approval from a financial institution.
You could advertise your car on reputable car-selling websites, which could result in dealers and the general public interest in your vehicle. Please be safe and careful when dealing with people you don't know. Be mindful of the information you share with strangers as well.
The price a dealer would pay for your car could be less, but selling to a dealer, either via a trade-in or directly, is so much easier. This is because you don’t have to stress about car advertisements, having endless meetings with potential buyers, and addressing legal issues such as transferring ownership. Dealers will pay you immediately, but they will also manage all the legal paperwork and any dealings with your bank.
According to AutoTrader, cars can lose between 15 – 30% of their market value within the first year. After 3 years, you could lose up to 50% of the car’s value. Because new cars depreciate more rapidly than used cars, it’s to your advantage to keep a new car for a longer period. On the other hand, used cars have already lost much value, which means owners won't lose much when they sell.
Please note, this article can only be a source of information. Please consult a registered financial service provider for more information before buying any car insurance product.
Now that you have sold your car, you maybe consider buying a new one. Will you finance your vehicle purchase? It is a legal requirement to buy comprehensive car insurance if a bank finances the new car. So, are you looking to purchase comprehensive car insurance? Enjoy affordable, comprehensive car insurance with fixed premiums* and a reduce to zero excess* with PMD. T’s and C’s apply.
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