Four important things to consider before buying a new car

Whether you’ve decided to downsize to save money or to buy a bigger car to accommodate your changing lifestyle, it’s easy to fall for newer, stylish cars and all the added extras. However, it’s important to know what you’re looking for, so you don’t end up buying a car well over your budget.

Barend Smit, the marketing director of MotorHappy, offers advice: 

1. Depreciation

A car’s depreciation rate is the decrease in a car’s value over time. Many motoring experts will agree that choosing a car that holds its value well could deliver significant savings over time.

A car’s depreciation rate is determined by its desirability, size, and vehicle type. When you decide to sell your car, the mileage, fuel efficiency, reliability, number of owners and general condition will also contribute towards the depreciation.

First check the car’s depreciation rate. There are a lot of online calculators where you can research depreciation rates. This can be helpful when deciding between two similarly priced cars, as you may want to choose the car with a lower rate of depreciation.

2. Research

As you’ll be stuck with the car you buy for quite a while, do your research online and check out any reviews on the make and model — not only in SA but all over the world.

Ask friends, family and a qualified mechanic of their opinion of the car. Valuable information can be sourced from here.

Also do thorough test drives. Try more than one car, drive on the highway, on quiet suburban roads and even take passengers along with the drive.

3. The lure of “extras”

Decide on your budget before you get to the dealership, and don’t be pulled into buying those extras. It’s the car salesperson’s job to try to sell you some extras that you probably don’t need.

Remember that a car costs more than those monthly instalments — you need to factor in insurance, maintenance and fuel costs.

If buying a used car, consider investing in a maintenance plan. This takes care of all car services, as well as unscheduled repairs, parts, and labour.

4. Look before you sign

Pay attention to the financing terms. It makes no sense to negotiate the price down but then pay more long-term. If you’re buying a car through financing, shop around for a good loan.

You can either take out a finance agreement that will result in your car being paid off at the end of the term (for example 60 or 72 months), or you can lower your monthly instalment by opting to have a balloon payment at the end of this period. This will be an amount that you’ll still owe at the end of your financing period. You can then either sell your car to pay off this amount, or refinance it and take out another loan, assuming you don’t have the money available to pay it off yourself.

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