n00b's guide to purchasing a vehicle

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Messugga

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Good day

I'm thinking about buying a new car (well, second hand with low mileage new) and since I've never done so before, and noone I know seems to be willing to really talk about the subject and I'm too busy to actually go the the bank and deal with it now, only to find out that I possibly won't be able to afford it, I'm asking here :D
Now, selecting the car I want is NOT an issue. The bit that I do wonder about, is the whole financing thing, especially with the credit act. How exactly do they work out your monthly repayments and things? I know it's different for everyone and you can negotiate if you have a good credit rating (How long does it take for your credit rating to go up to something descent? Months? Years? ie. Is it really long term?)
I did Google and found on one of the car manufacturers, a calculator, but it had a 'balloon rate' field and I have no idea what that means.

Sorry for the ignorance, but I'm still quite young and not used to having debt of any form.

Cheers:D
 
If you a first time buyer, buy from a reputible dealer that has some form of backup and garentee, like toyota pre owned or VW mastercars. They arrange finance for you but check your options carefully try not to do baloon payments or residuals on second hand cars. Rather buy a cheaper car and leave some headroom in your cashflow. I know everyone wants to buy a wicked car but it is a luxury. Get something comfortable and reliable. Remember it is a depreciating asset, you lose money on it.
 
Gunny said:
If you a first time buyer, buy from a reputible dealer that has some form of backup and garentee, like toyota pre owned or VW mastercars. They arrange finance for you but check your options carefully try not to do baloon payments or residuals on second hand cars. Rather buy a cheaper car and leave some headroom in your cashflow. I know everyone wants to buy a wicked car but it is a luxury. Get something comfortable and reliable. Remember it is a depreciating asset, you lose money on it.
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Thanks for the reply. I was thinking a Polo since they're quite cheap to maintain. I could probably pick up a 2007 TDI since they're not too expensive, or a 1.6 or so with a bunch of extra's. TDI seems nice though... Will give them a ring and find out what my options are, guess that's the only way.
 
Messugga said:
I did Google and found on one of the car manufacturers, a calculator, but it had a 'balloon rate' field and I have no idea what that means.
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Balloon rate is either controls how fast payments are increasing (i.e. payments increase steadily over the years), or the final payment is huge (i.e. ballon payment at end). Either way its not something you want.

Have a look at the JD powers research stuff.
 
Just remember when buying a car to take the cost of insuring the car into account too. It differs a lot depending on the car and how old you are. I was looking at a polo a while back but the insurance on it was madness. They told me it is a high risk car.
 
To sum it up for you, to buy 'any' car, you need to have alot of money.
 
few things when financing
1. Ask them about the interest rate they offering you, prime less 2 percent is really good ... they will most prob try and charge you prime plus 1 ... but push for prime or even below

2. you can fix your interest rate or leave it linked ... if fixed it will be higher than the linked interest rate they offer you. Fixed im sure you know is like is the prime rate goes up your rate stays fixed

3. the other thing is residual (balloon payment) or higher purchase ... most people these days to the residual thing because your payments are lower every month .... so if they say 40% residual meaning after your 5 year term you still owe 40% of the purchase price (i think) ... on a straight HP sale after the term you fully own the car ...
 
Messugga said:
Good day

(well, second hand with low mileage new)
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Good move on buying a used car , by the time ur finished paying off you would have payed around 50% of the car`s value as interest.Def not an investment .

Below are my 2 cents

  • Increase you repayments if you can
  • Like the guys said , negotiate your interest rate and go with a reputable dealer
  • Extend the maintenance plan if you`r cash flow is not the best
  • Get a tracking device and window tint if ur in GP , tracking device it reduces ur insurance cost as well.smash and grabs can leave u more screwed than you think depending on whats taken!

I kept my old car and bought a place with the would be installments for the car, proved to be a much better investment.Also depends on how far you need drive as i only drive 3 KM to work .As you are young you might want to consider relocating closer to work as well .

Advantages of relocating closer to work ,you save

- Fuel
- Wear and Tear
- Time

Good luck with your purchase :)
 
arkunsan said:
I kept my old car and bought a place with the would be installments for the car, proved to be a much better investment.Also depends on how far you need drive as i only drive 3 KM to work .As you are young you might want to consider relocating closer to work as well .

Advantages of relocating closer to work ,you save

- Fuel
- Wear and Tear
- Time

Good luck with your purchase :)
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Well, I'd stick to my current car, but I'm relocating to JHB at the end of the year, most probably and I'll probably have to do a bit of driving and well...my car's not really suited for highway driving.

Thanks a lot for all the feedback guys, much appreciated
 
Here is a few things:
- Res/Balloon payment helps to lower the payment, but @ the end if you decide to keep the car. You still have to Pay that amount, as a rule we never take more than 30% res. Try finance without balloon payment and if they still ask too much, you could try the res-depending on what you can afford /month.

-They calculate your risk of finance and the amount, based on the amount of disposeable income you have leftover each month. You have to supply your bank account history(+-3 months), also on the finance form you have to state all the other credit you have and everything left over.That basically means if you are a 1st time buyer/fin you have to make sure that you have some cash leftover @ the end of each month or a car allowance @ work.

-The polo are nice cars and very much reliable, but they are not that cheap to maintain especially the TDi. We have a Polo TDi and even with the low Km's we do, none of the last yearly services have been under R1k!
I would suggest to either go for the Petrol Polo's, but they aren't that good value if you compare them to a similar Ford's. The polo's aren't that high risk compared to the citigolfs, if you buy a citigolf you can be sure that it would be stolen very soon! A Citigolf is currently the Highest risk car for insurance.

-For my 1st time seconhand buy i bought a Focus 1.6 Si, for the same price as a used polo.
 
Good move on buying a used car , by the time ur finished paying off you would have payed around 50% of the car`s value as interest.Def not an investment .
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A car was never considered an investment. The banks term it a liability. I don't see and never have seen any car as an investment. I've seen it more as the price I pay for getting around.
 
Turiko said:
A car was never considered an investment. The banks term it a liability. I don't see and never have seen any car as an investment. I've seen it more as the price I pay for getting around.
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Yep agree there and you need to keep that price as low as possible.
Get a jap car if you're not a die hard german fan. Jap cars are extremely reliable in comparision and parts are cheap and all over the place when you need 'em also even a new/recon engine for a jap car is cheap.
Insurance is usually cheap on em 2. If you're moving to GP a VW is a bad idea! Criminals love those cars! and insurance will be through the roof!
Also servicing costs will be higher compared to the japs and seeing as the jap(most) cars are simple in design you can service it yourself and if something small breaks replace it yourself.
 
Have you had a look at the mazda offers - not a fan personally but looking at the interest rates they offer it makes buying a 3 or 6 look very good
 
Beginner said:
Have you had a look at the mazda offers - not a fan personally but looking at the interest rates they offer it makes buying a 3 or 6 look very good
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I'm working on the wife so I can go buy a nice RX8. They are in the region of R 150k now.... I WANT ONE !!!
 
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