Your pre-ride guide to buying a new car
February 22, 2017
So it’s time to trade in that trusted old horse and replace it with a newer, shinier model. Parting with a beloved car can be a difficult undertaking, but it’s made even more challenging by the abundance of offerings currently on the market, which can prove overwhelming to those looking to upgrade their wheels.
Do you opt for a new vehicle or one with a few kilometres on the clock? Should you pick a manual or automatic transmission? Diesel or petrol? What type of payment option makes the most sense in the long run?
Before you pick out your next car, make sure to do a bit of homework beforehand and ask yourself these critical questions before signing on the dotted line.
Old vs. New
Shiny new vehicles with no kilometres on the clock can be very appealing, but there’s a lot to be said for buying a used or demo model vehicle. The most obvious benefit of opting for a ‘pre-loved’ vehicle is the cost, as your options are likely to be broader given the depreciation in value. As such, what might not be affordable brand new could fall within your budget when used, enabling you to opt for a bigger, better model. Just ensure you buy through a reputable dealer that can offer you assurances in the event of anything going wrong.
Service Plan vs. Maintenance Plan
Many modern cars come complete with high-tech features that require regular maintenance if they’re to be enjoyed to the fullest. As such, it’s imperative that you have a plan in place to deal with the sometimes high costs of maintenance and service. In some instances maintenance and service plans are one and the same, but be very careful of the fine print as you’ll need to understand exactly what you’re getting before you sign for anything.
Typically, a service plan is either valid for a duration of time or a specific distance. You will need to have your car serviced at regular and prescribed intervals – either annually or before you reach the maximum mileage allowed within that service interval. Not adhering to this may result in you forfeiting the remainder of the service plan, so make sure to check the terms of your agreement. Also, your service plan may include only routine parts and labour during servicing, rather than the repair of defective parts due to wear and tear. A maintenance plan, however, should cover these costs but might not cover the costs of servicing, so make sure to read that fine print thoroughly.
It’s also important, before you buy, to research some of the common issues experienced by other users of the vehicle you’re considering, identifying your likely expenses upfront and ensuring that your service or maintenance plan makes provision for them.
Remember that neither service nor maintenance plans cover you against accidental damage, so it’s vital that you have comprehensive car insurance in place before driving your new car off the showroom floor.
Petrol vs. Diesel
This is a question that should be answered based on your specific needs. While diesel fuel does cost slightly less than petrol, this can fluctuate quite significantly and doesn’t necessarily offset the markedly higher price of diesel vehicles. However, if you’re driving long distances on a daily basis, it might be worth considering a diesel option, which may save you money in the long-term.
Also read: 4 important things to know about buying a used car
Depending on the age of the car, diesel engines may also not need to be serviced as often as petrol engines, although individual servicing costs may amount to slightly more. Equally, diesel engines might be more reliable and require less in the way of repairs, but are likely to result in a larger bill each time you do.
Another thing to consider is re-sale value, as diesel vehicles tend to hold up better over time, largely as they’re more in demand than their petrol-slugging counterparts. As such, when the time comes to sell, chances are you’ll get a much better deal.
Automatic vs. Manual
When it comes to the age-old automatic vs. manual debate, your decision is likely to boil down to the type of driving experience you’re after. If you’re looking for the thrill and power of being in control, you’ll be better off opting for a manual transmission. If your pleasure is derived from the vehicle itself; if it’s a family car on the cards; and if your drive includes sitting in long periods of traffic where your clutch is likely to take more strain, an automatic is likelier a better choice.
Ultimately, the long- and short-term cost differences between the two are negligible. Although you might save your clutch some wear and tear by taking it out of the equation, you’re going to be paying more for an automatic and suffering on the fuel efficiency front.
Balloon payments vs. Regular instalments
Balloon payments – essentially a specified lump sum to be paid at the end of the repayment cycle so as to reduce monthly instalments – have become increasingly popular thanks to the soaring price of cars.
But while adding a balloon payment option to your finance plan might enable you to save costs in the short-term (and perhaps buy a car you wouldn’t otherwise have been able to afford), they will ultimately end up costing you down the line.
Problems can arise in instances where your car is written-off while you still owe the bank more than its insured value (which could be Retail, Market or Trade), so if you’re opting for a balloon payment option, it’s vital that you consider short-fall cover, so as to bridge the financial gap you might be facing.
Ultimately, while a balloon payment might be a necessary evil, it’s probably something best avoided if you’re aiming for long-term savings.
