It pays to negotiate a better car deal

25 July 2016 - 09:53 By Wendy Knowler

When money's tight, people tend to hold on to their stuff longer; cars and electronics in particular.And although there is much money to be saved by driving an old car - it's paid off and the insurance premium is lower - there's a greater chance of it being written off by your insurer, given its depreciated value after an accident, leaving you without enough money for a replacement.This is how it works - if the cost of repairs is more than 70% of the value of the car, the insurers will deem it a write-off and the owner gets a payout rather than a repair. So many people are dismayed to learn that their relatively old but beloved, low-mileage, impeccably looked-after car has been written off after relatively minor accident damage.Given that the basic premise of insurance is that you be put back - as closely as possible - to the position in which you were before what the industry calls "the insured event", you should be able to take that write-off payout and buy another, similar car.But in practice it doesn't always work out that way. The 2007 Toyota Fortuner 3.0 D4D 4x4 owned by Bevan Andriés, of Durban, was written off by Discovery Insure after it was involved in an accident last month.And he wasn't at all happy at the news that the insurer intended to pay him R153000 for it."I believe I could have sold this vehicle for more than R200000," he told Discovery Insure. "It had a full service history, was in immaculate condition, and a mileage of only about 125000km." He argued that he'd insured the car for its retail value - the average price a car dealer would sell it for - but he couldn't find a Fortuner of the same model, age, condition and mileage at any dealership in the country.Of the 59 Fortuners advertised for sale on major vehicle retail websites, the cheapest same model Fortuner he could find cost R170000 and it had double the mileage of his written-off vehicle.The average price of all the Fortuners was about R192000, and the average price of those with a similar mileage to that of his was R201000."So it is obvious that it is not possible to replace my vehicle with R153,000," he told the insurer.He said he was willing to accept R190,000. Discovery Insure then upped its offer to R168,000, which is when Andriés came to In Your Corner.So how is the price gap explained? Apparently it has to do with advertised prices versus the prices actually paid for vehicles.Discovery Insure's technical marketing head, Philippa Wild, said the company obtained its values from the Auto Dealer's Guide published by TransUnion Auto Information Solutions "and adjusted for mileage and condition"."TransUnion looks at the actual prices vehicles were sold for and not the (much higher) advertised prices," Wild said. "This is standard industry practice." The value Andriés arrived at for his Fortuner was based on advertised prices and not the price for which the vehicles sold.That suggests that dealerships are extremely negotiable when it comes to the price of their used cars.Andriés' initial payout offer was reviewed, Wild said, "because, according to the Auto Dealer's Guide, an insurer can load an additional 5%, depending on the mileage of the vehicle". Due to the mileage and condition of Andriés' Fortuner, Discovery Insure was willing to pay out 10% higher than the guide value, she said.The lessons: It pays to know the numbers the motor and insurance industries use (see below): don't accept the first write-off offer you get from your insurer and don't pay the dealership's asking price on a used car. Negotiate.CONTACT WENDY:E-mail: consumer@knowler.co.zaTwitter: @wendyknowlerDETERMINING CAR VALUESTransUnion receives about 30,000 records of vehicle purchases and sales from around 1100 dealers every month.In the case of vehicles of "low trading volumes", an estimated value is given, "derived by linking such vehicles to similar vehicles within their brand family", TransUnion told me.TransUnion does not "in any way prescribe any manner or degree to which the values should be used or relied on" by the insurance industry.HOMEWORK MADE EASYParts prices: If you're in the market for a second-hand vehicle, or a new one that you intend to hold on to for a long time, the cost of its parts is very important, because the more expensive they are, the greater the chance the car will be written off after even a minor accident. Motoring guru Malcolm Kinsey surveys the cost of spare parts every year - his 2015 Kinsey Report covers 74 of South Africa's biggest-selling vehicles. Find it at www.kinseyreport.co.za along with detailed parts price surveys dating back to 1996.Car history: If you've spotted a used car that looks like a good deal, it may be worth spending R140 on a Transunion Car Check report which reveals the model's year (often misrepresented), accident history and more. And a R10 Car Value report will tell you if the car has been overpriced.Go to www.carvalue.co.za Also available as an app.#SHELFIEPRIZE PLASTIC: What do these two products have in common? They, along with Energade, Flora oil, Woolworths' juices, and other products, are bottled in a 100% food-grade recycled plastic bottle - an SA first - which has won a string of international awards, including, most recently, the silver award in the WorldStar Sustainability Awards in Budapest, Hungary ..

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