Make smart decisions when buying and selling a car
By: Werner Bosman, CEO, Short-Term Insurance at PPS
The National Association of Automobile Manufacturers of South Africa (NAAMSA) reported that in 2018, 552 190 vehicles were sold compared to 557 703 vehicles in 2017 – this was a 1.0% decline from 2017. Buying your first car can be an exciting time but it can also be overwhelming and should never be done without proper planning and research.
Many young professionals find themselves making the wrong financial decision when buying their first car. Remember that owning a car - in most cases - is an expense that you will have for the next four to five years, so make sure that you take plenty of time before coming to a decision.
What you need to know
As a young professional, purchasing your first car is a major step towards independence however, there are other factors to consider and that come with that freedom. Whether you buy a new or used car, examine your financial situation and life requirements first to determine the best way forward.
Remember, you still need to pay for insurance, fuel and maintenance costs. Be honest with yourself about what you can and can’t afford and whether you will be using your car for personal or business use – this will determine what kind of car you buy. Make sure you shop around and compare prices, set up a test drive with the relevant people and if it’s a used car, make sure there is a service history that goes with it. As a consumer, know your rights so that you are not bullied into a purchase you are not ready for.
According to the Automobile Association of South Africa (AA), there are 11.4 million registered cars on South Africa’s roads. However, between 65% and 70% of these are uninsured. Most vehicle owners say car insurance is expensive and many have chosen not to take up the option. However, car insurance is about much more than repairing your car when you get into an accident. Most insurers have added benefits such as road side assistance, tracking devices fitted with impact alert and car hire included in their policies.
It is advisable to speak to a trusted insurer to get the right insurance for your needs. Insurance companies like PPS Short-Term Insurance have a unique understanding of professionals.
Your insurance company should explain the difference between premium and excess, comprehensive cover or only third-party cover as these offerings will affect the overall cost of your monthly premium.
Selling your car
How do you know when to sell your car? Should you wait until your car completely breaks down before you replace it?
There are many factors to take into account when trying to decide on the best time to sell your car such as: time, cost of repairs, and safety. If the amount of time or money required to keep the car running exceeds its worth, then get rid of it. Similarly, if it's unsafe or unreliable, it's not worth the risk.
When it’s time to sell your car, make sure:
Whether you are buying your first car or selling your existing car, don’t rush the decision as it will be costly in the long run. Once you know what you want to do, research as much as possible and prepare possible questions. Ensure you speak to all the experts to have a sense of comfort before making a decision.