Freedom to go wherever you want, your own playlist and flexibility – ah! Buying your first car is an exciting milestone, particularly if you’re a first-time buyer. However, it’s important to understand the process and your options to ensure you get the best deal for your pocket.

Here are some things to consider before taking the plunge.

What is your budget?
When you buy a car, the car won’t be your only expense. Write down all the costs involved with buying and owning a car. It’s important to note that these expenses will vary depending on the kind of car you purchase. Some of these may include:

• How much you can afford for monthly car repayments (if you’re taking out a loan)
• Licence plates
• Car registration
• Petrol
• Insurance
• Maintenance costs

Write all of these costs down to ensure that you’re prepared. If you’re unsure of the above costs, a family member or close friend who already owns a car, a car dealer or financial expert could help you with what to keep in mind.

Second-hand vs brand-new car

Once you have your budget in order, you have to decide between a new and used car. They both have their pros and cons:

New car

Pros

• No-one else has used the car, so it has very low mileage, if any at all.
• You get the maximum extent of your car’s warranty and service- and maintenance-plan cover.
• It can be more easily customised to your liking.
• You can save on insurance. For instance, with Budget Lite which is for unfinanced cars below R100k.

Cons

• It’s generally much more expensive (whether with a loan or cash).
• It starts to depreciate immediately. This means the value of the car starts to decline as soon as it leaves the showroom floor. For example, if you purchase a car for R100,000, in a year’s time its value will be 15–30% less than that.

Used car

Cons

• You need to thoroughly inspect it before buying.
• It often comes with high mileage.
• You’ll need a budget for maintenance costs sooner.

Pros

• It’s less expensive.
• It will have a lower insurance premium.
• You may still get a service plan and warranty on cars that have had one owner.
• The bulk of depreciation has already happened.

Do your research

• Make a list of all the cars within your price range that you are considering.
• Visit reputable car-dealership sites. You could start with Auto Dealer, Auto Pedigree and Cars.co.za. You could also use the sites of specific car brands. Visiting dealerships in person is a great idea because you can test drive cars to make an even better informed decision.
• Phone dealerships or keep an eye out for promotions or upcoming deals.
• If you already have a car, check how much you could shave off the cost by trading in your old one.

Once you’re ready to make your purchase…

Decide on how to finance your car
If you have savings, try and put a down payment of at least 10–20% to lower your monthly payments. When taking out a loan, read the fine print carefully. Try to:

• Choose a short repayment plan if possible.
• Avoid balloon payments, which require you to pay a huge chunk of money at the end of your repayment.

Choose car insurance carefully
Making the right decision about car insurance will save you money and keep you safe in the long run. Shopping around will give you the best value for your budget.

Budget Insurance offers seven different car insurance options. And if you choose to insure your car with us, you’re bound to save big bucks.

Avoid extras
Save money by opting out of adding nice-to-haves like a sunroof, an audio system and bigger wheels. This could cost you a lot more than the original price. Remember, you won’t make a bad decision if you do your research and keep all of these tips in mind.

Happy shopping!

Budget Insurance is an authorised insurer and financial services provider.

References

https://www.cars.co.za/motoring_news/9-tips-buying-a-car-on-a-budget/44932/

https://www.news24.com/wheels/News/Guides_and_Lists/first-time-car-buyer-heres-10-things-you-need-to-know-20160126

https://bettermoneyhabits.bankofamerica.com/en/auto/buying-your-first-car