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Saturday, August 3, 2013

Things to consider when buying a new car

Budgeting properly helps car buyers avoid overspending
Knowing trade-in value protects against dealer undervaluation
By Greg Jones

Are you sick and tired of seeing flashing warning lights on your dashboard while driving, hearing funny noises and wondering if you will even make it to your destination? Sure, you could send the car for repairs, but this will only be an on-going and unnecessary burden on your already stressful life. So why not buy a new car? In the long-run this will be cheaper than fixing the sinking ship that is your car.

A new car will not only be more reliable that your old one, but it’ll also come with a motor plan and AA emergency road-side assistance, for car faults or break-downs. However, buying a new car is not as simple as walking into the nearest car showroom and pointing at a car. Buying a car requires research, asking questions and well proper planning.

Here are some important tips for buying a new car:

Determine your budget: When shopping for your new car, make sure that you determine how much you can spend on it. Financial planners advise that you spend no more than between 15-20% of your monthly budget on repayment costs. Therefore, have a look at your budget and determine the price range that you are able to afford. Remember, while a couple of hundred rand a month does not seem like much in the short-term, the long-term repayments will catch-up with you. That’s why you have to ensure that you stick to your budget.

Know your trade-in value: When buying a new car, you need to get rid of the old one. While this vehicle might seem like a pile of steel junk to you, there is a resale value. Ensure that you ask around and find out what a reasonable trade-in price is for your car.

Do some research into new cars: Once you have determined your budget, the next step is to do some research into the car market. Ask car dealers, look at car blogs and check in with local car magazines and newspapers. All of these will give you valuable insight into the price of cars. Remember, during this stage, you need to find a vehicle that not only suits your budget, but also your lifestyle. For instance, while you might only be able to afford a Smartcar, if you are a family of five, this will not be a practical buy.

Take it for a test drive: Once you find a few cars that suit your budget and requirements, the next step is to take them for test drives. This is essentially to gain a feel for how the vehicle drives and whether it suits your driving style. If you do not like the drive or feel uncomfortable –the chair hurts your back or you cannot see out of the back window-, you are only going to regret the decision at a later stage. Therefore, ensure that you find a car that is comfortable and suits you. Before moving on to the next step, take as many test drives as you need to be sure that this is the right car for you.

Sign the contract: The last step is to buy the vehicle. During this stage, you need to speak to your local bank or finance provider to ensure that you qualify for asset finance and that your credit check is approved. Once you qualify, the last step is to sign the contract. Remember to read the small print and the repayment terms to ensure that you are comfortable with the new car.

Buying a car is easy, but buying the right car on a budget is a far trickier task. Ensure that you buy a car that suits your needs and your budget. Remember, before driving the vehicle off the showroom floor, to have your vehicle properly insured with your insurance company and to check that it is fully licensed. 

About the author: Greg Jones recently bought a new car. I was absolutely lost during this process, until my brother in-law (a asset finance clerk) explained the process of how I can obtain the best trade-in and interest rates on my car loan. I now have a brand new car and a fantastic repayment deal that suits my needs.

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