Buying a brand new or high value car is a great feeling. These are often once or few times in a lifetime purchases. The sheer size of the transaction can be overwhelming, and intimidating - therefore it is a must to be prepared! This article highlights some key tips for you to consider before taking delivery of your new vehicle.
Well if you're like most guys, this is a done deal. We know exactly what car we want down to the last colour, or two. Point is, if you know what you want don't waste too much time. Stop! I know what I want, take me to the important insurance tips. But if you're not sure yet, read further ...
What are you looking for? What is your vehicle purchase history? Choice choice choice. Read reviews in car magazines, car shows on tv e.g. DSTV Ignition. Dealer brochures are nice and glossy but as a warning their intention is to sell sell sell, so do some research to arm yourself before you walk in and smell that exquisite interior.
Is this a lifestyle purchase or for some practical reasons? Chances are if you're buying a vehicle for leisure or for the love of cars and high tech breakthroughs, budget may not always be the main consideration, nor should it be, if what you're after is cutting edge, luxury or an advanced engine for example. Either way make sure your purchase is aligned to your need or want!
Brand new motor vehicles particularly the fine variety have a cult-like following in South Africa. The prestige and number of units available in SA, could seriously affect the timing of delivery from the moment you decide to purchase.
You may have to put down a sizable deposit e.g. 10% to get onto the waiting list of a high demand brand new car. Check with different dealers as to their requirements to secure the car
A key tip: Market demand affects price often primarily determined by new model launches. With rapidly changing technology, car manufactures are masters at holding back the latest and greatest next thing. When it is in production, the car demand skyrockets and so can prices. So it is best to do some research on when the next generation or facelift is going to launch.
Facelift models are minor changes to the appearance and design aesthetics of an already popular car, giving it a refresh in the hope to attract new buyers. These can affect the value of the current 'shape' of vehicle and thus also affects the demand for it.
What are the best ways to negotiate a fair price? Well it is a known fact that car prices in SA are much higher than the rest of the world for the exact same vehicle. But doesn't it still seem like there isn't much of a fuss about this, judging by the cars on the road! Maybe it is in fact down to supply and demand, and at those prices the demand is still there..
Some avenues to consider when trying to determine a 'fair price':
But the key tip here is down to one word: schemes. Check with your company or loyalty programme that you're apart of - if they have partnerships with specific dealership brands. It's unlikely that all car brands will be available, but maybe you'll get lucky and find another 2.5% discount off the new purchase price.
Another tip: dealer specials. Check which dealership networks have specials running and which don't. Best way is to phone them and find out. First do research to see which networks exist. For e.g. The Lindsay Saker group is different to the McCarthy group, and Hatfield VW for instance even though they sell the same brand of car.
A little bit of patience is required when purchasing a new vehicle. The dealer and particularly the dealer salesperson has to do a lot of paperwork behind the scenes to get you into your new car! Their commission has to be well earned after all ...
Modern cars have a wealth of different options: sunroof, park distance control, xenon lights, fog lights, front spoilers, M performance kits, 18 inch, manual or DSG gearboxes, metallic paint, the list goes on! The point is, dealers often source exact vehicles matching your specifications from other dealers, or even competing networks in other cities possibly, so the arrival of your vehicle can take some time.
Many high-end vehicles are also fully imported, and may take time to arrive in SA. If you're planning on taking your new car with you over the holidays plan ahead so that you're not disappointed!
Here is the not so nice part. But probably the most important for your own piece of mind, and driving pleasure in the years to come. You've worked hard to get to this point. Now its a matter of doing the paperwork thoroughly, getting it approved, and then filing it away for future reference.
Affordability is key here. Is there a trade-in involved? If so you will need to do the research on your current motor vehicle value and then work out the financing difference.
At this step you would need to make the crucial decision as to whether to sell your current vehicle at dealer prices or go through the extra effort of selling it privately.
Here is an example invoice to consider when doing your sums:
|New vehicle base price||R420,000|
|Sunroof, keyless entry, xenon lights, kit||R38,000|
|Less discount||- R30,000|
|Service & Delivery||R4,000|
|Smash & Grab protection||R3,000|
|Dent Repair Policy||R5,000|
|less trade-in + additional deposit||R90,000|
|Total Finance amount||R350,000|
The above shows vehicle base price, plus factory fitted extras, plus dealer value-added services to you such as on road fees whereby the vehicle is registered, licensed and number-plated for you before you take delivery - these are optional, and you can save some money by doing it yourself if you so wish. Other policy extras such as smash and grab tinting and film protection can be done for you prior to delivery.
Then finally to determine the final car finance amount, take the R440,000 and subtract the trade-in value on your old vehicle, and the additional deposit you're going to add to the deal if any. Now you can determine the monthly installment for a R350,000 vehicle finance loan.
This is critical to service on a monthly basis. Make sure you have a debit order in place. Also shop around at different finance houses for the best interest rate. If you work for a bank, you will get preferential interest rates so this is the best offering by far. You can opt for a fixed rate or a linked rate depending on your desire to ensure that your repayments do not fluctuate with prime rate changes.
As you are taking out vehicle finance, you will need to service monthly payments to remain in good standing with the credit bureaus. Ensure that you never miss one payment on your vehicle so that your credit record remains intact for your next vehicle purchase! Remember the higher your risk, the higher your interest rate.
This is buried way down the page, don't be fooled into thinking it is not important. On the contrary this is the most important tip you will find on this page!
Reason is, you are entering into a financial transaction with a big finance institution for an asset that is about to be listed in your name. That means you are now legally liable for any damages and costs arising from this vehicle - not just to yourself but third-parties as well.
This requires you to shop around while patiently waiting for your vehicle :) You will be surprised how varied insurance premiums can be for new vehicles. Especially high value vehicles. Phone insurers and get quotes until you are satisfied that your premium is affordable.
If you purchase a brand new car, at say 2016 prices, then know that should the car be written off recently after you purchase, your payout from the insurer thanks to your comprehensive cover above, will be less than what it will cost to replace the vehicle - your invoice price - at the same dealership AND most likely less than the settlement amount on your vehicle finance agreement. This is because your insurer will pay you the retail value or market value of your vehicle less depreciation.
Do this quick calculation to decide if you need top up insurance...
Take the purchase (invoice) price brand new - your insurance payout after depreciation = short fall
This formula above refers to an extended form of top up insurance called Return to Invoice (RTI) which covers not just the (credit) shortfall to get to your finance agreement's settlement amount, but the additional funds to get you to the invoice amount.
This shortfall is what you will sadly be without and thus not able to buy that same car again. Well you could if you find a second hand car with similar mileage but its not the same is it?
(R440,000 purchase price x 10% depreciation in that year)to put me in the exact same position prior to the accident?
If this makes you uncomfortable you've just realized the importance of top up insurance - which is the fraction of the cost of comprehensive insurance. Be financially astute and get the right products that are available! Don't put yourself at unnecessary risk of never getting back into a car like that immediately should something unfortunate happen.
The only other tip to this is: Get the top-up cover in place before taking delivery as well! Absolutely critical to do this, as your shortfall will be immediate because once you drive it, it is no longer brand new, so it has depreciated.
Luxury vehicles of today are not just mere cars, they are works of art, and engineering masterpieces built in factories without so much as a spec of dust on the floors. Get the picture?
The complexity of what you are buying cannot be underestimated, as a result to protect you from exorbitant parts prices, maintenance thereof and not to mention specialized skilled labour required to keep these in working order - the maintenance plan was born. Peace of mind at a price you pay upfront. Think of it as an insurance policy to cover those unforseen expenses, big unforseen expenses most likely.
These plans come in the form of and expire when a term or kilometer limit - whichever comes first - is reached. E.g. you can take out a service/maintenance plan for 3years or 60,000km mileage. You can also take out an extended warranty product to extend your cover once nearing the end of the policy.
Well-known maintenance plans can have a stipulated grace period for bringing your vehicle in for that particular service interval e.g. a 1000km grace period would mean that if your vehicle is due for its 15,000km service beware that you'd need to take it in for service before it reaches 16,000km on the odometer.
It has become standard for insurance companies to require vehicle tracking devices on new high value, high demand cars. These new innovations using satellite technology have greatly increased peace of mind and safety of drivers by enabling the rapid recovery of lost or stolen vehicles.
This is another bit of research you will need to do, as there are quite a few providers and different plan offerings. Factor in the extra monthly fee that will eat into your budget. There is no need to go to the highest uber plan but a sound mid-range plan should be perfect for your needs. Do not compromise on added security.
Parking in a crammed parkade need no longer cause you anxiety. Most likely scratch and dent repair policies will be offered to you by the salesperson at your dealership. This often is paid upfront - bolted onto your finance agreement or paid by you. This policy then allows you to take your vehicle into any designated repair centre and get your chips and scratches fixed at no subsequent cost to you.
These have to be within certain reasonable limitations of damage otherwise it would have to be referred as an insurance claim.
Scratch and dent repair protection gives you all round peace of mind that your vehicle is looked after - maintaining its best value over time. After all this automobile is unlike any other. One to be admired.
Happy and safe driving!
Since they started in June 2012 King Price has seen growth by the thousands each and every month in South Africa.
King Price car premiums decrease monthly as your car depreciates. As an example a
Traditional insurance total premium over 36 months would result in R29 349, but
King Price the total premium over 36 months amounts to R23 520. An
instant 20% saving of over R5 829!