- Self inspection: Do a proper self inspection on:
- Credit : Check your current credit status by downloading your latest Credit Report. Check your credit score against the segments (Poor to Excellent). Remember defaults don’t necessary mean you won’t qualify for finance however it will likely impact the interest rate given by the bank. A Judgement definitely nullifies your chances of getting finance, just like being on debt review.
- Instalments : Payment of instalments is the critical part of your finance relationship with the bank something that runs for years (3 to 7 years). You therefore need to do a proper analysis of how much you will pay per month. Things to consider with regards to your instalments include (1) Deposit contribution (2) Term of finance – months of payments (3) Residual – are you going the balloon payment route or not and if so what % are you comfortable with (4) What interest rate do you envisage getting in relation to your instalment. For the instalments, WesBank has the very useful instalment calculator
- Settlement : In case of a trade in (swapping your current financed car for the new car you seek to buy) get a settlement letter from the bank. If current car is financed under residual, your settlement includes the balloon amount.
- Be patient : If financing your new car, you are going into a relationship of years with a bank, the best thing to do at planning is to be patient. You need to give yourself around 2 months of planning for the new car before taking delivery. This so you give yourself enough time to look at alternative deals on a similar car. Also make enquiries on possible upcoming discounts by making enquiries between dealers. Avoid getting into rushed deals when the sales person says (1) We have a discount that runs out this week (2) We only have this unit and there will be no stock for months. (3) The trade in offer on your car is only for 2 days. These are all tricks, ask around (imotoonline) for advise before making a decision influenced by the above points.
- Trade in : If trading in current financed vehicle, be aware of:
- Evaluate current car : The used car section will evaluate your current car for the best value they are willing to pay for it. The amount they pay needs to be analyzed against current retail values (online is the best place to compare).
- Settlement : Compare the trade in value from the dealer against the settlement amount you would have received from the bank. If there is a shortfall between the settlement and the trade in value, that amount needs to be settled before you get into a new deal. Some dealers offer trade in assistance which needs to appear on the contract and Offer To Purchase (OTP) document. Avoid loading the shortfall on the new contract as this will increase your new car instalments.
- Drop off : Only drop your current car once all the figures of settlement are done and the contract on the new car has been properly reviewed. Avoid the dealer convincing you to drop the car now so your deal is fast tracked. Like mentioned above, be patient. Remember your current car is not new and so don’t compare it to the new one and find yourself making an emotional decision
- Emotions : After test driving the new car, do not allow emotions to get the better of you. This is especially important when you drive back home in your current car and start to feel its age.
- Contracting : This is the single most important part of the buying process and also the most overlooked aspect by buyers. With emotions of a new car, buyers tend to rush signing contracts and never interrogate the contents of the contract. Key points to consider on this aspect:
- Take time to review contract: I think you are now getting the importance of patience in the whole buying process. When you get the contract from the Dealer Finance and Insurance (F&I) Manager, be sure to go over each page. The contract comes from the bank and not from the dealer, as such, if there are any issues you have, the F&I can assist with clarity but the bank will make the changes. If there are any changes needed to be done, sign a contract that already has those changes done. Request the contract at least 2 days prior to car delivery so you can go over it properly. This allows you to note areas of concern and enough time to get these rectified or explained in time.
- Residual info : The contract will have residual finance information clearly noted on it. This ensures that you are not surprised at the end of the payment term with a request for a balloon payment. The balloon payment will be in both % and R value. This is the amount that you will need to pay at the end of the contract.
- Quote/OTP amounts on contract : Be sure to compare the amounts on the contract with the amounts discussed when you agreed to the Quotation and Offer To Purchase document. The amount are noted as VAT exclusive on the first part with the VAT added further down the document. Extras are noted after the VAT inclusive amount of the new car. The extras amounts should already be inclusive of VAT. There are dealer costs on the quotation which cannot be removed but are negotiable price wise. These are (1) Delivery fee (2) License and Registration and (3) Documentation fee. Vehicle extras like nudge bar, side steps, smash and grab protection etc are negotiable. These can be excluded should the buyer not want them.
Tips when buying a car
There is a thin line between buying a car and being happy. Getting the worst deal can transform the new car experience to be a nightmare.
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