Buying a Car? Make Sure You're on Budget
I’m looking to buy a new car, what should I buy? This question is asked daily by millions of people across the world, and the answer is usually loaded with opinions and emotions.
With this in mind, we’ve decided to keep it simple and try to remove as many of the emotional grey areas as possible with a few easy guidelines for you to consider when you buy a car.
Determining your monthly instalment should be simple enough; look at your payslip and consider what you can afford to pay monthly. Apart from just what you can pay, look at how much you feel comfortable paying, taking into consideration all of your living expenses. That R5000 car instalment may seem fine today but a year down the line, when other expenses creep up, it can put a strain on your budget.
This applies to cars that are financed or bought with a personal loan. The last thing you want is bad credit history because you over-committed on a car.
A balloon payment is a final payment you make when settling the cost of the car at the end of the finance period, usually after 5-years. The balloon payment is normally about R15000 to R25000 but can go higher depending on the finance structure, and it is levied on top of your final instalment.
The balloon payment has crept up on many buyers, and you need to consider it when you purchase a car. You can either save up for it over the instalment period, pay extra on each month’s instalment or pay a larger deposit.
INSURANCE, INSURANCE, INSURANCE. We cannot stress this enough! Insurance is one of the most important things to consider when buying a car for two reasons. One, it has you covered if you are in or the cause of an accident, and two, it covers the bank finance if the car is written off.
When buying a car, you need to look for one with a monthly insurance premium you can afford, taking into consideration your living situation. If you live in a dangerous area, you don’t have a garage etc. this will affect your monthly premium. Some insurers also demand that you fit a tracking device, so you need to factor in the monthly subscription fee as well.
In these tough economic times, many people are cancelling their insurance policies but this is extremely risky. If you hit a Ferrari tomorrow and you don’t have insurance, you can find yourself in serious financial trouble. If your car is financed and gets stolen or written off, and you don’t have insurance, you will remain responsible for your monthly instalment despite no longer having a car.
Many people underestimate the cost of maintenance on a car, and maintenance plans can give you a false sense of security when purchasing a car.
The reality is that maintenance plans do not cover all the repairs associated with a car. Your maintenance plan may only cover service costs meaning that you can be held liable for payment if your clutch needs to be replaced.
If you are deciding to buy an older model without a service plan, then make sure that you find out how much a standard service would cost, together with the expected maintenance costs. Here it is best to do your research, find out what seems to be a weak point on the model and generally, the more popular the model, the more affordable it is to maintain.
Tyres are such an important safety aspect of your car and because they usually last several years before they need to be replaced, many people don’t usually view them as an expense...until you need to replace them.
Tyre prices vary based on size, brand and application. A performance model may be equipped with the same size tyre as a lower-spec model but because it uses a performance compound tyre, it will cost more to replace. Speaking about compounds, tyres designed for high-performance applications tend to wear faster so you need to consider that as well.
To help you when it comes to tyres, check out the size of the tyre on the car you are buying and price them at a local tyre shop. If you are buying a used car and the tyres are not in the best shape, try and get the cost of the tyres discounted from the price.
Let’s face it, we all love the biggest engine and the one which makes the most power. That’s natural and in many cases, paying the extra R15,000 to go from the 2.0 to the 3.0 V6 or turbocharged model can seem worth it.
Sadly, however, more power usually means more fuel and when it comes to the pumps, your daily driver can become more of a daily expense. This does seem extremely boring but in a country like South Africa where fuel prices go up on a whim, finding a car that’s light on fuel is essential when trying to balance your budget.
You're Ready To Hit The Showroom
Buying a car, whether it’s a new one or used is a large financial commitment, and you want to get the best value for money without added expenses. That’s why it is so important to consider the factors listed above. If you are in doubt, then speak to one of our ClickaCar dealers, tell them your budget, tell them what you need the car for (if you have three kids then the little red sports car is not going to do you any favours) and let them help find the car that’s best suited to you.
Now that you know everything there is to know, hit the ClickaCar Virtual Showroom and find your next car!