8 February 2023: Buying a car, new or used, is a big commitment, but it does not have to be a daunting one. Proper planning will ensure you get the car you can afford while minimising risk along the buying journey.
With the vast selection of cars available from a large variety of sellers, it can be difficult to find the one that’s right for you. Start off by asking yourself how much you are prepared to spend on your car and be realistic about what you can afford.
Technology has made it much easier than ever before to research and buy, and WesBank’s affordability tools and repayment calculators are a fingertip away to assist you in the buying phase. WesBank provides you with a few important things to consider as well as steps you should take before signing your offer to purchase (OTP), finalising transactions and driving away in your dream car.
New or used, that is the question
Availability of new car stock around the world due to supply chain constraints and the semiconductor shortage has narrowed the price gap between new and newish pre-owned vehicles.
It’s a simple case of supply and demand, and dealers are understandably charging more for used cars they can source for stock than they might have before the pandemic. However, beware of paying too much. Do your research and make sure you’re not paying too close to a new retail price for a pre-owned vehicle.
Then, as always, there is a massive selection of older used cars with attractive price tags to choose from. These options may vary in condition, and might have factory warranties and/or service plans that are either nearing expiry or are already expired.
So which of these is the correct choice? There is no right or wrong answer, but understanding the pros and cons of each is vital for making the best decision for you.
Benefits of buying a new car
The upside of buying a new car is the certainty of knowing exactly what you are buying. No one else has ever owned it, and there’s a guarantee that it has no hidden secrets from previous owners.
You also get the advantage of a full manufacturer’s warranty and in most cases, a service or maintenance plan. These plans can vary from brand to brand in terms of length of validity periods and what’s covered, so do your research and compare what’s on offer from different manufacturers.
New car dealers are often able to extend appetising incentives to customers as well. These can range from discounts on models that are soon to be replaced with new ones, to preferential interest rates and the flexibility to offer generous trade-in assistance programs and more. While these incentives are obviously designed to lure buyers in, they can pay off in the long run in some cases. Just don’t be swayed into a purchase because of a free braai set or branded cap.
Used car benefits
While the attraction of a brand-new vehicle may be tempting, choosing a pre-owned car or an earlier year’s model might be more prudent for your purposes. Some used cars, including dealer demo models, are often in almost new condition and still benefit from lengthy aftersales warranties and service plans, with reasonably discounted sticker prices depending on mileage and age.
Most car brands also offer approved pre-owned programmes, meaning these cars come with some added benefits such as extended aftersales plans and guarantees. They also undergo thorough checks by certified workshop technicians in order to get the stamp of approval for ‘approved’ status.
While depreciation is an unavoidable reality of owning a car, used vehicles almost always suffer less depreciation from purchase price than a new one. In other words, the original owner, who bought the car new has already incurred a significant amount of depreciation simply by taking ownership. When buying a used model, you’re starting off from a lower initial outlay and the effects of depreciation are felt less in your wallet.
There are some excellent deals to be found in older model used vehicles, but it can also be a riskier purchase as vehicles’ histories get cloudier as they age. Try to identify cars with full service histories, and even better are those with full histories at official franchise dealers. Also, try to take a trusted mechanic with you to view an older car to make sure there are no major issues before taking delivery.
It’s also worth considering buying extended warranties, either from the manufacturer itself where applicable or from a third party. WesBank offers a selection of warranty products that cover designated mechanical repairs, parts and labour depending on a car’s mileage and age.
Start with a budget
The most important part of the car-buying journey is compiling a list of all current expenses and income. It is important to shop around and compare car prices to find a sensible and affordable car that fits within your budget. WesBank’s online budgeting tool helps you calculate how much money you have available at the end of the month to use towards a vehicle repayment. Don’t forget to budget for fuel, insurance, tyres, service costs and more – and remember that these costs can change over time. It is also advisable to build some leeway into your budget to accommodate for rising fuel prices, interest rate increases and unexpected costs associated with driving.
Choose a reputable dealer
If a deal seems too good to be true, it normally is. It might be tempting to buy a newer, fancier car advertised at a low price by a small independent dealer or private seller, but you must let common sense prevail. There is likely a reason why that car is priced the way it is, and you might run into issues with it down the road.
It’s safer to do business with reputable dealers who will go to great lengths to protect their reputation through quality products and customer service. Read reviews from other customers to find out what experiences they’ve had. Ask your friends, colleagues or family, for recommendations. They should be able to direct you to a dealership or even a salesperson who provides an excellent customer experience.
