With the festive season and bonus season seeing many people take delivery of new cars, its important for buyers to take note of the following before signing their contract:

• Clarity on information: Every dealership should have a person in charge of Finance and Insurance. This person is authorized to deal with all matters related to the Financing and Insuring of your vehicle. One of the key things they are there for is ensuring that each buyer is clear on all the matters related to their purchase contract. As a buyer, you should ask everything and anything that gives you clarity on all the contract terms. In cases where you might need explanation in your preferred language besides that the F&I is familiar with, note to them to arrange someone to translate on your behalf.
• Residual or no Residual: I have always maintained that Residual is not the devil most people perceive it to be. The challenge arises when its not explained properly or when people get loaded on a residual finance deal without their knowledge. Before signing your car purchase, please ensure that the residual percentage is as per agreement. In cases where it was not discussed and you see terms related to it, ask the Finance and Insurance person for clarity. Residual is only in percentage (%) reflecting the portion of the finance that will not be financed. This amount will come back as a balloon payment at the end of the finance term. You will need to pay it to the finance house before you can take full ownership of the vehicle.
• Terms of finance: The terms of finance can range from 12 months to 72 months. This is the period for which you will be paying monthly installments for the bought vehicle. Make sure that the agreed period is reflecting as such on your contract.
• Interest rate: The finance house that buys the vehicle on your behalf will always charge interest on the transaction and this should reflect in your contract. The interest rate is also in percentage (%) and is listed as a percentage number added to the prime-lending rate at the time of purchase (Prime +1/2/3). The interest rate charged has a bearing on the monthly installments you pay, the higher the interest rate, the higher your installments. It is also important to check if your interest rate is fixed for the term of finance or linked. If its linked, it means should the Reserve Bank adjust the Prime Lending rate, your interest on financed amount will also be adjusted.
• Purchase price: When you are interested in buying a vehicle, the dealer will give you a quote which details all the costs associated with buying that vehicle. If you agree to these, you then sign the quote and keep a copy. The details as agreed on the quote SHOULD reflect as is on the contract. This includes the purchase price, extras you wanted and their prices. There is no additional cost that should be added without the buyer’s consent. There should be no cost added on the contract, which you did not ask for. In cases where things like: Extended warranty, small dent insurance, credit life, smash and grab etc. are added, please ensure that its explained to you. Personally I do not agree to having these added on the purchase price as they accrue interest as per agreed contract interest rate. Its better to make these purchases as cash after delivery.
• Vehicle details: Ensure that the purchased vehicle details reflect on the contract. Check these against the vehicle physically. Important info to confirm includes: VIN Number, engine number, colour, make, model, year.

Should you have any enquiry which you need the iMotoonline team to assist you with, do not hesitate to contact us by email at sibonelom@imotoonline.co.za so we can best give clarity. We assist for free.