Make smart car buying decisions during tough economic times
New vehicle sales were down 1.3% year-on-year in the first half of 2017, indicating the tough economic times where consumers are holding more tightly to their purse strings. How can they make smart car buying decisions while being prudent with their finances? Lizette Erasmus, Insurance Expert at IntegriSure says “Making a sensible car buying decision comes down to understanding the key aspects involved in a car purchase”. says.
- Decide whether to buy a new or used car. Compare the value you receive when buying a brand-new car versus a pre-owned one. The popular belief that a new car loses approximately 20% of its value the minute it leaves the showroom floor may not be entirely accurate, however cars lose their most value in the first two years, making the prospect of buying used cars more attractive. Pre-owned cars also decline in value, however at a slower rate than a new vehicle.
- Understand the real cost of car ownership. Regardless of whether you buy your car brand new or pre-owned, it is important to calculate the cost of ownership of your vehicle of interest. “Ownership cost is not only about the monthly instalment to be paid to the bank. Consumers should consider the expense that comes with owning a car – such as insurance, fuel consumption, maintenance, as well as parts availability and replacement costs. In this way, there are fewer surprises down the road,” says Erasmus.
- Know the insurance aspects. The cost of insurance can have a significant impact on your car buying decision. While the age of the car you buy can influence the insurance premium you pay, cars do not automatically attract a lower premium just because they are old. Sometimes newer cars may have better safety features, lessening the risk – ultimately lowering the premium you pay. The price or value of the car also influences the cost of insurance. The higher the replacement or repair cost of the car, the higher the premium charged. In addition, the insurance premiums for high-risk cars that are commonly targeted by criminals is likely to be higher. Erasmus advises that drivers who exhibit responsible behaviour, such as installing an immobiliser or a tracking device in their vehicle, are usually rewarded with lower premiums.
- Consider the car’s resale value. People don’t always buy cars with the intention to sell later, however, there often arises an opportunity to either trade off the car as a deposit for a new one or sell it for extra income. Therefore, keep the car’s resale value in mind when making the decision to buy, in case you end up needing to sell the vehicle.
- Conduct proper research. One of the most important aspects of buying a car is making sure you understand what you are getting. Do your homework, or you may end up getting far less that you bargained for. “You may want to know whether the vehicle you intend to buy is truly at the mileage reflected on the odometer, whether it was ever written off, any police or third-party interest in the vehicle or whether it is still subject to a financing agreement. There’s an array of service providers who provide such information at a small fee based on the vehicle identification number (VIN),” advises Erasmus.
The key to making the best car buying decision, it would seem, lies in investing time in research, weighing your options objectively and, ultimately, driving off with the best deal to suit your needs and pocket.
Via: IntegriSure