Good per month pricing?

Firstly, try never buy a new car - always try and buy a less than one year old low mileage (preferably well below 10 000kms) - the depreciation of the car in the first two years just doesn't make economic sense. Most dealerships will give you the remainder of the motorplan and warranty along with these almost new cars anyway, so you don't lose much in terms of the "new car benefits".

Secondly, negotiate as much as you can with your finance house on interest rates, residual values, balloon payments and of course deposit. Try and put down as big a deposit as you can - and do not go for balloon payments or residual payments. The reason is simple, a deposit amount will decrease your finance amount and you will therefore have a direct reduction in the total amount of interest you will pay. However, adding a residual will amount to more interest paid, as the final amount is not deducted from the capital amount right until the end, meaning interest is recalculated on the total outstanding amount including the residual/balloon amount every time the finance house adjusts (after interest rate reductions, after you monthly payments and in some instances even daily!)

Lastly, what you pay per month is determined by:

(Total interest calculated against (The cost of the car + The extras you put on the car + Taxes and registrations - the deposit) + interest calculated against (balloon payment or residual amount) + (The cost of the car + The extras you put on the car + Taxes and registrations - the deposit)) / 60 [or 54 or 48 or 36, etc]


The "specials" advertised on TV with a rather "low" monthly amount usually have rediculous terms attached, such as this example (Ford Ranger 3.0 TDCi Super Cab - Priced @ R256990 - http://www.ford.co.za/servlet/ContentServer?cid=1178844093136&pagename=Page&site=FMCSA&c=DFYPage)

Deposit: 27.05%
Balloon Payment: 45%
Interest Rate: 12.837%

So even though the monthly payment of R2900 seems affordable, given the depreciation of the vehicle, and the fact that your last payment will be a cash amount of R115645.50 (which you will probably need to finance again) it just doesn't make economic sense to finance a car this way. So, paying R293646 and still owing R115645.50 after 60 months? Not for me, thanks.
 
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I bought a 2003 Opel Corsa Comfort A/c for R65600 and i pay R1612 p/m ( i gave a 10% deposit as well, but the interest rate is what screwing me over at the moment. Banks refused to give me anything under prime +3)
 
Although I agree residual/balloon payments aren't good as you pay more interest, I do believe they help if you trade in your car every 2 - 3 years.

The disadvantage of this is, you'll always have debt (or as some state you'll always be a slave) but at least you'll have a new car every 2 - 3 years.

If you plan on keeping the car for at least 5 years, then residual is definitely not the way to go.

I personally like new cars :P and have had my current Focus ST for just over 2 years now, so I'm trading it in for a brand new Focus ST and I'm loading a residual value as it's "less" money to pay each month. In the end there is the balloon amount, but I'm not concerned with this as I will never pay that amount myself :P

Working with me previous examply let's say I keep the car for 30 months...

Without Residual I pay a total of R4757.99 * 30 = R142739.70
With Residual I pay a total of R4080.59 * 30 = R122417.70

Hence for me it makes more sense to take it with residual plus if I look at depreciation trends if you're residual is 30% max, you should break even in about 2.5 - 3 years.
 
EvoBunny said:
Although I agree residual/balloon payments aren't good as you pay more interest, I do believe they help if you trade in your car every 2 - 3 years.

The disadvantage of this is, you'll always have debt (or as some state you'll always be a slave) but at least you'll have a new car every 2 - 3 years.

If you plan on keeping the car for at least 5 years, then residual is definitely not the way to go.

I personally like new cars :P and have had my current Focus ST for just over 2 years now, so I'm trading it in for a brand new Focus ST and I'm loading a residual value as it's "less" money to pay each month. In the end there is the balloon amount, but I'm not concerned with this as I will never pay that amount myself :P

Working with me previous examply let's say I keep the car for 30 months...

Without Residual I pay a total of R4757.99 * 30 = R142739.70
With Residual I pay a total of R4080.59 * 30 = R122417.70

Hence for me it makes more sense to take it with residual plus if I look at depreciation trends if you're residual is 30% max, you should break even in about 2.5 - 3 years.
Click to expand...

but then you stay perpetually in debt ? I understand its cheaper but doesn't it worry you that you don't actually own your car ?
 
EvoBunny said:
Although I agree residual/balloon payments aren't good as you pay more interest, I do believe they help if you trade in your car every 2 - 3 years.

The disadvantage of this is, you'll always have debt (or as some state you'll always be a slave) but at least you'll have a new car every 2 - 3 years.

If you plan on keeping the car for at least 5 years, then residual is definitely not the way to go.

I personally like new cars :P and have had my current Focus ST for just over 2 years now, so I'm trading it in for a brand new Focus ST and I'm loading a residual value as it's "less" money to pay each month. In the end there is the balloon amount, but I'm not concerned with this as I will never pay that amount myself :P

Working with me previous examply let's say I keep the car for 30 months...

Without Residual I pay a total of R4757.99 * 30 = R142739.70
With Residual I pay a total of R4080.59 * 30 = R122417.70

Hence for me it makes more sense to take it with residual plus if I look at depreciation trends if you're residual is 30% max, you should break even in about 2.5 - 3 years.
Click to expand...
But then why take the car on an HP agreement to begin with? Why not just take the car on a rental option? http://www.ilease.co.za/ has some good information. So then you don't really take on the debt, and you don't really own the car.
 
does the lease work same if say the care is damaged, what happens if its a write off ?
 
Leases are a good idea, I've heard you get those contract clauses where you can't drive over so many km's per year, and the car must be in mint condition when you give it back.
 
Bondizzo said:
but then you stay perpetually in debt ? I understand its cheaper but doesn't it worry you that you don't actually own your car ?
Click to expand...

Jip, that's the problem, you basically then stay in debt, but like I said, I like driving a new car every few years so for "me" it's "cheaper".

Plus it doesn't bother me not "owning" a car as such :p
 
Buy it cash, if you save 50k, use it as a deposit, finance the other 50...
 
@EvoBunny

what happens when the care gets damaged, even written off in a accident and its on lease ?
 
I bought a used car 6 months ago with over 130000kms on the clock for R60K.
I could afford to buy a new car but when I saw the amount of interest I'd pay I quickly changed my mind.

The typical argument I hear against a used car is that it's more expensive to maintain and repair because it's out of a motor plan and that it's cheaper to buy new. That's often not the case unless it's a luxury vehicle.

Work out how much interest one pays on a car of R160K over 6 to 7 years. It's something like R90K!
My logic is that I'd rather buy a decent used car for R60K (R160K for equivalent new vehicle) and spend 20K fixing it and only pay R20K of interest over 4 years.
Total cost is R100K including interest and repairs vs R250K for a new vehicle in the same class.
An extra R150K really helps with paying back a house bond or for investing for rainy days.
A car is always a disinvestment. Rather use the money for something that retains or gains value.
 
Paul_S said:
I bought a used car 6 months ago with over 130000kms on the clock for R60K.
I could afford to buy a new car but when I saw the amount of interest I'd pay I quickly changed my mind.

The typical argument I hear against a used car is that it's more expensive to maintain and repair because it's out of a motor plan and that it's cheaper to buy new. That's often not the case unless it's a luxury vehicle.

Work out how much interest one pays on a car of R160K over 6 to 7 years. It's something like R90K!
My logic is that I'd rather buy a decent used car for R60K (R160K for equivalent new vehicle) and spend 20K fixing it and only pay R20K of interest over 4 years.
Total cost is R100K including interest and repairs vs R250K for a new vehicle in the same class.
An extra R150K really helps with paying back a house bond or for investing for rainy days.
A car is always a disinvestment. Rather use the money for something that retains or gains value.
Click to expand...

AND on top of that, the new car depreciates much faster than your old car. In 7 years it will also be worth only R60K. That's another huge loss you take when buying new.
 
Necuno said:
does the lease work same if say the care is damaged, what happens if its a write off ?
Click to expand...
You can insure it just like any other car. Also you get different "levels" of leases.

On one level you only pay for the rental part of the car and are responsible for the operational maintenance yourself. On another level, you pay a higher lease and it includes maintenance (such as services, etc). Some leases will even include your tyres (fuel of course is excluded).

What I forgot to mention earlier was that after the lease is concluded, you will in most cases be able to buy the vehicle at a substantially reduced amount from the leasing agent or company.
 
2CentsWorth said:
You can insure it just like any other car. Also you get different "levels" of leases.

On one level you only pay for the rental part of the car and are responsible for the operational maintenance yourself. On another level, you pay a higher lease and it includes maintenance (such as services, etc). Some leases will even include your tyres (fuel of course is excluded).

What I forgot to mention earlier was that after the lease is concluded, you will in most cases be able to buy the vehicle at a substantially reduced amount from the leasing agent or company.
Click to expand...

i see. tx
 
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