Correct information enables you to make informed decisions regarding car insurance and car financing in South Africa. If you are considering purchasing a car, this article is for you. Please note that this article is not providing any financial advice but only information.
Do you require insurance when buying a car? 1,2
The answer is no, if you are paying cash for the car, but purchasing car insurance would still be a wise move. According to Autotrader.co.za,1 the law says that your vehicle must be insured if financed by, e.g., a bank. The same would apply if you bought a house or any other property that is being financed. The reason for this requirement might be apparent. Imagine driving out of the showroom, crashing at the next traffic light, and then having to pay off a car you no longer possess!
The three types of car insurance available at Prime South Africa are Comprehensive car insurance, Customised Cover, and Third Party Plus.
Comprehensive car insurance2
Comprehensive car insurance provides the best cover, including write-off and accident damage, covers damages caused by natural fires, disasters, theft, and hijacking. Also included are third-party liability cover, full retail value cover, 24-hour roadside assistance and towing, hail damage cover, and glass cover.
Customised Cover 2
Customised cover includes cover for a write-off, third-party liability cover, full market value cover, and a minimum cover guarantee. Growing cover for smaller accidents, 24-hour roadside assistance and towing, hail damage cover and glass cover are also included.
Third-Party Plus 2
This type of car insurance offers third-party liability cover, growing cover for smaller accidents, and hail damage cover too.
What happens should you trade in your paid-up car? 3
Trading in a fully paid-up car is preferable, says Autotrader.co.za, because funds you receive from the trade-in can go towards reducing the cost of the new car. In this way, your debt with the bank will be considerably lower, and you pay off your car much sooner.
What about ‘balloon’ payments? 3
According to Autotrader.co.za, you should preferably avoid balloon payments when seeking financing for your car. The reason is that once your contract has ended with the bank, you still need to pay off a generally large ‘balloon’ amount. Many motorists enter such a deal, only realising too late that it’s just not affordable. The significant disadvantage is that in the end, you pay a lot more interest for your car.
How is your credit history?3
Having a low credit score could be challenging when applying for financing with the leading finance houses. Beware of in-house finance offered by some dealerships that would love to assist but who will likely charge you more interest. These dealerships also tend to be stricter when you miss a payment – you don’t want them to repossess your car.
Disclaimer
Car insurance is complicated, and that is why this article provides you with the necessary information. Should you want to buy a car insurance product, please contact a certified, financial advisor for professional advice.
Once you have found a bank to finance your next car, you will have to obtain compulsory comprehensive car insurance. Why not contact Prime for a quote on their affordable, comprehensive car insurance, which comes with unique benefits like premiums that never increase* and a reduce to zero excess*. T and Cs apply.
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