Are you thinking about buying your first car in South Africa? Buying your first vehicle is very exciting, but it can also be daunting from a financial point of view. You may be asking yourself: “What am I letting myself in for?”. When the purchase has been made, and you are sitting in your new car, reality begins to hit home. You are now responsible for something you must continuously maintain. This is especially true when it comes to car insurance. With about 70% of all South African motorists having no car cover, insuring your car should not be debatable.1 The question is, what type of car insurance could be the best option for a first-time car buyer in South Africa?
Disclaimer
This article should only be considered for information purposes only as car insurance is not straightforward. Please obtain professional advice from a certified financial advisor if you want to purchase car insurance.
Below are a few tips that first-time car buyers can use to help decide what kind of car insurance they need.2
Set up your budget 2
Budgets are crucial to ensure careful and responsible spending of your monthly income. Your budget will tell you what kind of car you can afford. Spending more than what you earn builds debt, which is not easy to remove.
What is the cost of having a car? 2
Based on your budget, you will know what price range you can afford. Besides current and future monthly instalments for paying off your car, there are also fuel costs, maintenance costs, and insurance costs to consider.
What about a bank loan for your car? 2
Most prospective car owners cannot afford to pay cash for their first car, especially first-time buyers This means that you may need to approach a financial institution such as a bank for a loan. Depending on your credit history, this process may be easy or difficult. You may have to work for a little while without buying a car to be able to build up a credit record.
What type of car insurance is available? 3
As a first-time buyer, you need to understand what car insurance options are on the market. Comprehensive car insurance is a type of car insurance that fully covers your car, but for that reason, it also usually costs the most compared to other types of car insurance. The next cheaper option is usually a customised cover, and finally, the most affordable is called third-party car insurance.
Comprehensive car insurance 3
If you buy a new car through a financial institution such as a bank, comprehensive car insurance is required. If premiums are too high, you may want to buy a less expensive vehicle. Prime South Africa’s comprehensive car insurance provides an excess that reduces to zero, and premiums that never increase*. The third-party cover benefit is up to R1 million and your car’s full retail value is covered for write-off and accidents, disaster, natural fire, theft, and hijacking. 24-hour roadside assistance and towing service are also included, as well as hail damage and glass cover. Ts and Cs apply.
Customised car insurance 3
Prime’s customised car insurance option provides an excess that reduces to zero and fixed premiums*. Third-party liability cover benefit is up to R500 000 and your car’s full market value is covered for write-off and accidents, disaster, natural fire, theft, and hijacking. Smaller accidents are covered on a growing benefit basis. With Prime, 24-hour roadside assistance and towing service, as well as hail and glass cover, also form part of Customised car insurance. Ts and Cs apply.
Third-party car insurance 3
With Prime’s Third Party Plus product damage to a third party’s car is covered up to R500 000. What is most beneficial is that there is also a growing cover component for your own car for smaller accidents. With Prime’s third-party car insurance, premiums are fixed* and hail damage is covered up to R10 000. Ts and Cs apply.
With Prime’s Third Party Plus product damage to a third party’s car is covered up to R500 000. What is most beneficial is that there is also a growing cover component for your own car for smaller accidents. With Prime’s third-party car insurance, premiums are fixed* and hail damage is covered up to R10 000. Ts and Cs apply.
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