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Buying a new car is exciting. However, getting from the browsing stage to the stage you sign on the dotted line is less so. Whether you want to buy a car that's new or one that is used, the process isn't one that can take place overnight- unless you don't mind ending up with a vehicle you regret purchasing! If your current ride can still get you from A to B safely and efficiently, you have time to make an unhurried decision on what your next car will be. If you want to make the best possible choice for your needs and wallet, consider implementing Motus Select's six simple tips for buying a car. You'll find that each tips makes the process of hunting for a vehicle less fraught with pitfalls and more fun than ever!
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Saving isn't the most glamorous way to work towards getting a car, and if you're like most South Africans, it would take you years to secure enough finance to purchase one outright. Buying a car and paying for it in full is excellent if you can afford it. However, if you're thinking of getting it financed, you should realise that even the tiniest amount put down as a deposit could shave months (or thousands of rands) off what you end up paying in the end. Having a deposit will make you a more attractive prospect to lenders, so if you can, try to put away a little each month. By giving up the occasional beer or your daily cappuccino, you could decrease your monthly payments - and we think that's more than worth it.
The dealership across the road from your workplace has put an enticing sign up. They're offering a cute little hatchback for just under two grand per month - but only until month-end. It's a steal - so you should snap it up, right? Not until you read the fine print. The hatchback could indeed be just R2000 per month - but it could come with a hefty balloon payment at the end of the term. Alternatively, it could be for a basic, entry-level model lacking all the comfort and safety features you'd assume it would have. While all car deals seem pressing and urgent, never let yourself commit to one without carefully considering the pros and cons first. If a dealership or salesperson starts pushing you before you're ready, rather find a seller that will let you choose a vehicle at your own pace.
The same principle applies to financing. Don't feel obligated to accept the first offer you receive. Take your time, look around and don't conceal this from the bank in question. You might find this motivates them to give you a better deal in terms of your interest rate or overall payments.
When considering the cost of a potential car, never, ever choose one that's close to the higher end of what you can afford. Remember that your car instalment might only make up half of what you'll need to pay per month. You'll need insurance, and you might also need an extended service, maintenance or warranty plan. Then, of course, there's fuel, which experiences unpredictable price hikes and drops every month. A car that is costing you more than you can afford every month is not one you want to be saddled with. If you end up having to sell it even just a few months later, it will have already depreciated by a significant amount, so you'll likely have to sell it at a loss or break even with what you owe on it.
Did you know that what you pay for a car in one month could differ from what you pay in the next? Timing is everything when it comes to buying a new car, and if you're willing to wait a little, you could save thousands. This means shopping during quiet selling periods, such as during the December holidays or over the Easter festive period. If you have a specific model in mind, do your research or enquire as to when a new release or update will be released. When this occurs, many drivers will want to trade-in or sell their models just so they can say they're driving the latest one, which will mean you'll have plenty of low mileage vehicles in good condition to choose from. If you don't have that much time to spare, wait at least until month-end or the end of the year's quarter, as this is when you're likely to find a good deal as old stock is cleared and new stock is brought in.
It's natural to have strong opinions about which car brand is the best. It's something that will be informed by your personal experience and the feelings of your family and friends. However, this should never be the be-all and end-all of your decision-making process. We're not suggesting buying a car you find hideously ugly and would hate to drive. We're saying that even if you have your heart set on brand X, give brand Y a chance too. We suggest writing down a list of qualities your car needs to have and asking your local Motus Select to shortlist a selection for you. Many a time a buyer has walked into one of our dealerships hellbent on Honda - only to find out one test drive later that a Hyundai better fulfils the vision they had in mind for a dream vehicle. You have nothing to lose, so why not?
Your car should never be a utilitarian piece of equipment that only allows you to travel back and forth. Enjoyment is necessary - as are perks like a backseat infotainment system (to keep the kids busy on long drives) and heated seats (for those chilly winter drives to and from work). It's important to differentiate between what you can afford to add now - and later. For example, purchasing a car with an advanced climate control system included in the price would be wise, but things like tinted windows can easily be added after the fact, with little hassle. It's something to keep in mind if you're trying to keep your initial costs low.
Follow the above tips and not only will you end up with the car that's just right for you - you'll also be fending off comments from others wondering what your secret is to having had such a painless car buying experience. Whether you share them or not is up to you!
Dealership sales staff are the best persons to tell you about all the ins and outs and features of various models on the showroom floor. However, once you have decided which car is best for you, you will be handed over to a business manager or F&I specialist who will guide you through the financing process. A business manager within the dealership environment is an expert in the different financing processes and will be able to structure the best deal according to your needs, affordability and financial situation. However it is important to have a basic understanding of the following financing terms in order to make the best decision about how to finance your next car.
Deposit
The deposit is the cash amount that you will need to pay as part of the financing deal. It is up to the buyer what percentage they would like to put down as a deposit, but most financial institutions will require a minimum of 10 percent. A bigger deposit means a lower loan amount which will translate into a lower monthly payment. A bigger deposit also means less risk for the bank which could translate into a lower interest rate.
Pre-approval
A pre-approval is the amount your financial institution determines they are able to lend you according to your credit rating and affordability. This is a valuable tool as it will allow you to shop within your means and avoid applying for finance on a car that you can’t afford only to be declined by the financing institution.
Interest rate
Financial service providers will charge you interest on the amount they loan you and this percentage will be added to your monthly repayment amount. Depending on the option you choose, the interest rate will either be fixed, or it will be linked to the Prime Interest Rate which is determined by the South African Reserve Bank.
Instalment Finance
Instalment finance is the traditional way of financing a vehicle. This sees the motorist pay a deposit and then monthly repayments along with interest for a period of between 36 and 72 months as per the agreement. At the end of the financing period once all payments have been made, the vehicle becomes your property.
Balloon payment
A balloon payment is when you initially only finance a portion of the total vehicle price via an instalment finance agreement in order to pay a lower monthly instalment. At the end of the contract period the remaining percentage will need to be paid in cash, refinanced or the vehicle can be sold to settle that outstanding balloon payment amount.
Guaranteed Future Value
Guaranteed Future Value (GFV) is becoming an increasingly popular financing option. Vehicles depreciate the moment they drive off the showroom floor and a GFV plan gives motorists a future value for the vehicle after a certain amount of time and mileage upfront. For example after three years the vehicle is worth R300 000.
Knowing what the vehicle will be worth after three years allows a deal to be structured around that amount. Options include an instalment finance agreement with a balloon payment which is equal to the GFV, which will allow the motorist to drive the vehicle for a certain period of time, pay a monthly instalment but then not have to worry about refinancing the balloon payment. At the end of the period they will be able to return the vehicle for an amount equal to the balloon payment and walk away not owing anything further.
Settlement amount
The settlement amount is the amount that needs to be paid to the financial institution to settle the finance agreement prematurely. This will be required when you want to buy a new car before paying off your existing car or if you choose to pay off your car with cash from a yearly bonus or savings. Once the settlement amount is paid the vehicle becomes your property.
Total price
This is the total price you will pay for the vehicle over the contract period and includes the selling price, , interest and admin fees over the repayment period. The longer the repayment period and the higher the interest rate the more you will pay in total.
Title holder
While you might think that your new car is yours it is actually owned by the bank or financing institution until paid in full. While paying off a vehicle you will be listed as the owner, but the bank will remain the title holder, and they will retain the registration document until the vehicle is paid off. Once the vehicle has been paid in full, the vehicle becomes your property and will be transferred into your name at the provincial licensing authority.
Leasing agreement or full maintenance lease
A leasing agreement or full maintenance lease sees motorists drive a new car for a certain amount of time and pay a monthly fee for the usage of the vehicle. This fee will include usage as well as maintenance and insurance bundled into one amount. At the end of the term you simply return the vehicle. This type of agreement is akin to a long-term rental as the vehicle never becomes your property, you only pay for the usage thereof.
Trading in your vehicle means selling your vehicle to a dealership as part of a transaction to buy a new vehicle.
The profits from the trade in are then used towards part finance of the new model and the dealership will go on to sell your old vehicle on their pre-owned floor or into the trade.
The trade in process was how motorists traditionally swapped their old car for a new car but this process has been challenged in recent years with the advent of retailers who specialise in buying and selling pre-owned vehicles and who aggressively market these services, but which is the best option?
The benefits of trading in your vehicle
Trading in your vehicle for a new vehicle simplifies the process as both transactions can be handled as one deal. This could also mean savings as retailers will be more willing to give you a better trade in price if you are buying a new vehicle from them or a better deal on a new vehicle if you are trading in a vehicle with them. This is due to the fact that there is an opportunity for the dealership to make an additional profit by reselling your old vehicle to the next person. One transaction via one dealership also simplifies the financial transaction as the dealership will handle everything for you. This includes settling the balance owing on your old vehicle and either paying you out or transferring the balance towards the financing of your new vehicle.
The benefits of selling your vehicle?
The biggest benefit of selling your vehicle outright is that you can sell it as is. This is particularly attractive if your car has known issues, such as slight damage or requires maintenance to be done, such as the replacement of the tyres. While issues with the car will affect the price there will always be willing buyers as long as the price is right. Selling your car outright might be necessary if your car doesn't meet the dealerships trade in requirements, which could include criteria such as condition or mileage.
Selling your car outright allows you to take the money and buy your next car according to your terms. This option might also be attractive if you are considering a new financing option such as leasing a vehicle or moving onto a company car scheme. The disadvantage of selling your car in this manner is that you need to deal with a second entity and conduct a separate financial transaction.
How is your cars value determined?
Whether you choose to trade in your vehicle or sell it, the value of your car is determined by an industry standard for that exact model adjusted according to age, mileage and condition. Cars depreciate significantly during their first year and will then continue to do so every year. Mileage also has a significant impact on the value and whether you drive less or more than an average of 15 000km per year will have a bearing on your vehicles resale value.
The vehicles condition will also be taken into account when determining the trade in or selling price. Any issues such as stone chips, damage to bodywork and chipped windscreens as well as the wear and tear to the interior will affect the value.
Factors such as service history, the balance of a service or maintenance plan and remaining warranty period will also affect your vehicles value but less significantly.
Do your homework
There is no point in saving in the short term if it is going to cost you in the long run. When considering whether to sell or trade in your car as part of the new car shopping process it is important to consider the deal in its entirety to ensure that that you are getting the best deal in the long run.
Buying a pre-owned vehicle is a great way to drive the car of your dreams at a significantly reduced price. Unfortunately the pre-owned vehicle market is flooded with resellers who are focussed on making a profit and less so on the quality of the vehicles that they offer for sale.
One of the easiest ways to ensure that you are getting a good quality pre-owned vehicle is to shop at a reputable reseller such as Motus Select.
Motus Select prides themselves in offering good quality pre-owned vehicles that adhere to strict criteria that guarantee quality and allow motorists to shop with confidence.
Motus Select have a number of checks in place to ensure that all vehicles sold through their outlets are of a good quality as well as a pre delivery process that ensures a hassle-free purchase experience.
Vehicles offered for sale via Motus Select are only done so after being subjected to a thorough inspection, vehicles are either subjected to the in house 110-point quality check or they are inspected by independent specialists such as Dekra.
A Dekra report will highlight any special options that a vehicle may be fitted with while also making buyers aware of any imperfections. This ensures that the buyer knows exactly what they are getting, which is a reliable car that will not be followed by surprises down the road.
A Dekra report is a customised, professional used vehicle condition evaluation completed by expert, independent, Dekra examiners. The quality of the Dekra condition report ensures complete peace of mind when purchasing a vehicle as it virtually eliminates any surprises.
The 110-point Motus quality check includes a thorough inspection of the engine transmission and fuel lines as well as systems such as the air conditioning, steering, lighting systems, exterior condition, exhaust system, under carriage, brake system, tyres, clutch, windshield and safety belts.
To ensure that all cars have a fresh look and feel, they are treated to a full valet as part of preparing them for delivery to their new owner.
Before a vehicle is put on sale any outstanding accident damage, service and maintenance tasks will be sorted. This will either be done by the franchised dealer if the car is still covered by a service plan and warranty or by an approved repairer in the case of damage or the fitment of maintenance items such as tyres. This alleviates the burden of having to get any issues sorted before you can really start enjoying your new car.
Motus Select further ensures that all vehicles have a full, verifiable vehicle history that includes a full servicing history, certified ownership and a certified accident report.
The Motus Select Business Manager will be able to assist with financing the vehicle by structuring a deal that suits your budget. Business managers will also be able to assist with other administrative tasks such as insurance cover if required.
If the vehicle you are purchasing is nearing the end of its service plan or warranty, these specialists will also be able to advise on peace of mind offerings such as an extended warranty or service plan.
All vehicles sold through Motus Select will be registered onto your name. In order to do so the vehicle will need to undergo a roadworthy check, and all the previous owners outstanding finance would have been settled. While having the car registered onto your name alleviates any administrative burden it also ensures that there are no surprises down the line.
Dealing with a reputable reseller such as Motus Select offers many advantages, including the fact that they will handle all the admin, allowing you to drive off in the car of your dreams, knowing that all the t’s have been crossed and i’s dotted where necessary. Buying from a large group such as Motus Select also comes with added peace of mind, due to the fact that Motus Select own all the vehicles that they offer for sale and because shopping at Motus Select means dealing with SA’s largest dealer group.
Buying a new or pre-owned car can be an extremely exciting process but it can also be a daunting prospect as dealership sales staff and banks throw around technical terms that can be confusing. Understanding what these terms related to the car buying process mean will allow motorists to make a much more informed decision around the intricacies of the car buying process.
Credit check
When applying to buy a car via a loan or leasing agreement the financial institution will do a credit check. This check is done to determine a few things including the level of risk they are taking by entering into the agreement with the motorist, how good you are at servicing existing credit agreements as well your affordability.
Loan agreement
A loan agreement allows motorists to buy a car and pay it over a number of years, which can range from four to six years. At the end of this period, once all payments are made, the car becomes your property.
Lease agreement
A lease agreement allows you to pay a monthly fee and to drive a car for a certain period of time and is often referred to as a long-term rental. At the end of that period you will need to return the car to the leasing company in a pre-agreed condition. The advantage of such an agreement includes lower monthly payments but the disadvantage is that the car will never become your property.
Deposit
A deposit is the cash amount that you pay upfront when financing a car and will be subtracted from the total price of the car. The balance will then be paid off via a repayment agreement. Not all financing institutions require a deposit, and this requirement can depend on your credit rating. However, the bigger your deposit, the less your monthly payments will be and the less interest you will pay over the contract period.
Monthly payment
Your monthly payment is the agreed amount that you need to pay back every month for the period agreed upon in your loan or leasing agreement. This amount will include interest, admin fees as well as a portion that goes towards repaying the capital amount.
Interest rate
The interest rate is the amount that the financial institution charges to loan you the money and is added to your repayment on a monthly basis. The interest rate is determined by your credit rating. Interest rates are either fixed for the entire term or can change along with the prime lending rate if you opt for that option.
Residual value or balloon payment
A residual value allows motorists to only finance a certain percentage of the car, for example 60% and pay a lower monthly instalment. At the end of the contract period the remaining 40% will still be due and this will need to be paid off via a new finance arrangement or by selling or trading in the car and using the proceeds from that transaction to settle the outstanding debt. While lower monthly payments are attractive to many motorists, a big disadvantage of a balloon payment is that it takes much longer to pay off the car, which means you will pay more interest over the contract period.
Comprehensive insurance
Comprehensive insurance protects motorists against loss or damage to their vehicle. Comprehensive insurance will replace your vehicle in the event of theft or replace or repair a vehicle should it be involved in an accident. Financing institutions will require insurance as the car remains the property of the financing institution until it is fully paid for.
Service plan
A service plan covers regular service items such as oil and filters at manufacturer determined service intervals with work carried out in an OEM manufacturers workshop. A service plan will be valid for a predetermined period of time and mileage, such as five-years/75 000km and will expire once one of those parameters are met.
Maintenance plan
A maintenance plan covers service items as well as wear and tear items such as brake pads, tyres and shock absorbers, with work carried out in an OEM manufacturers workshop. A maintenance plan means that motorists will not need to spend any additional money on maintaining their vehicle for the period of the plan. A maintenance plan will be valid for a predetermined period of time and mileage, such as five-years/75 000km and will expire once one of those parameters are met.
On the road fees
On the road fees are the financing charges applied for getting the car ready for delivery. This includes a pre delivery inspection, registering the vehicle into your name, licensing and the fitment of numberplates if required.
We live in an era of online shopping where almost everything we want, and need can be found online. The same goes for cars. Long gone are the days of driving from dealership to dealership looking for the car that suits your criteria and pocket, these days internet searches have simplified that process entirely.
It is even possible to complete the entire car buying process online and while that does offer numerous advantages, a physical test drive should still form part of that process. A vehicle might seem perfect for your needs, but a test drive could reveal shortcomings in areas that are important to you such as performance, a lack of features or even ergonomic issues such as a seating position that doesn't accommodate your body shape comfortably.
Test driving a car before buying is a crucial part of the process as it is the only way to truly get a feel for the car and whether it is right for your needs and usage requirements. These tips will help you get the most out of the test drive experience.
Is it the right car for me?
A test drive is a great opportunity to gauge aspects of a car in a real-world environment such as whether it has enough performance, if the interior is large enough for your family and whether the boot or load capacity is ample for your requirements. Being seated comfortably is crucial to driver safety and enjoyment and a test drive is the only way to determine which car fits your body type best.
How does the car perform?
Judging a cars driving characteristics is about more than just outright performance. A test drive gives you an opportunity to feel what the car steers and brakes like, how heavy the clutch is and how smooth it shifts gears. It is also a great way to get a feel for how the controls and systems like the infotainment system work.
Drive more than one car
If you are undecided on an exact model a test drive is a great way to compare different vehicles and get a better feel for the options. If you are shopping in the pre-owned market, driving more than one example of the same model will allow you to compare vehicles with the aim of determining if the particular vehicle you are considering is a good example.
Check for damage
While the test drive process is important when shopping for a new car it is critical when shopping for a pre-owned vehicle. A test drive is a great opportunity to inspect a vehicle for any signs of abnormal wear and tear or serious damage that has been repaired. While accidents do happen, vehicles that have been badly repaired and show signs thereof, with misaligned panels and mismatched paint should be carefully considered. A test drive is a great opportunity to listen out for any potential issues under the skin. Strange noises and rattles could hint at outstanding maintenance issues. While driving listen out for any strange sounds, especially when turning, driving over bumps or while braking and accelerating.
Don't skip the test drive
The age old saying which goes, “The proof of the pudding is in the eating”, is said to mean that one can only judge the quality of something after you have tried, used or experienced it. This is particularly true when it comes to car shopping, whether that be for a new or pre-owned model. The only way to truly know if a car is right for you is to get behind the wheel.