Whether it is new or used, buying your first car can be an amazing experience, if you are properly prepared and aware of all the potential pitfalls. Juan Wheeler, Chief Financial Officer at FCA South Africa provides some tips for first-time vehicle buyers.
The first step on the journey towards buying your new wheels starts off with creating a budget in order to establish affordability and price range of the vehicle. This budget has to go beyond the potential instalment costs that you are going to have to pay to aspects such as car insurance, your potential monthly fuel cost, toll fees, maintenance costs and future interest rate increases if and when they occur.
In order to obtain finance from a bank, you will need to have a good credit history, as it is one of the main considerations for financial institutions, when it comes to the decision to provide you with a car loan.
New graduates who have just started working and paying their own bills may have to work for a while before they are eligible to apply for vehicle finance. However, FCA offers Graduate Jump-Start Finance that has been specially designed to enable new graduates to own a new car, making a credit history less essential. This offer also provides additional benefits such as not having to pay a deposit and included car insurance for a year.
A few more tips to consider:
- Purchase the vehicle you need, rather than the one you want (but can't afford): Be realistic when it comes to the short list of cars you are considering. SUVs might be very popular and highly aspirational, but affordable, fuel efficient vehicles will serve you well if you are financially stressed, and you'll thank yourself for your decision every time you have to fill up after a fuel price hike.
- Always maintain your vehicle and limit the chances for unforeseen car-related expenses: For buyers of used or second-hand cars, look out for vehicles that come with a warranty and if it is possible, try to extend the warranty and maintenance plan (if the vehicle comes with one).
- Pop the car buyers' bubble: Be cautious of balloon payments - While this option may provide you with more affordable monthly repayments up front, it ultimately includes a parting gift in the form of a substantial outstanding amount to repay at the end of your loan period. Always ensure that this outstanding balance will be covered by the value of your vehicle when you opt to trade-in/sell your car for a new one.
- While it may be a grudge purchase for many, car insurance should be a mandatory inclusion in your car budget. If the vehicle is written off in an accident, you will still need to pay it off. Insurance will also help to cover potential third-party claims.
These tips should ensure that your journey of owning that dream car doesn't take an unwanted sho't left to turn into a financial nightmare.