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New Car Buying Tactics to Win over the Car Dealership

Buying a new car is a privilege and beyond exciting. But it can also be nerve wracking and fraught with risks.

This article aims to provide you the reader with some clear guidelines on what to look out for, and for you to tick the right checkboxes before shaking on the deal and cruising away in your new ride.

Trade-in tactics

There is nothing like a great deal. A deal that makes you feel like a winner. Many car dealerships are hustling to make sales, every month of the year.

If you buy the latest and greatest be prepared to pay premium prices for that exclusivity. On the other hand if you know your car brands and have been eyeing them out for a while from a distance, know when to strike for a hot deal. As an example an outgoing model can sell at significant discounts, brand new, but on a discontinued line. This is called a 'runout' in industry jargon, which means the car is one of the now old model production units on the showroom floor. Dealers want to sell this stock so that they can clear space for the next generation model. The car is brand new with no mileage that also cannot be sold at the used car division.

Trade-in Assistance

A run-out can also come with a sweeter deal in the form of trade-in assistance. This requires you to have a decent, good selling car to trade-in. How this works is that the dealer will offer you a premium in real rands put toward your trade-in value of your car at that present moment. That trade-in assistance amount can be used by you toward the part finance of the new car, or for just about anything you want to spend it on -- it's your money!

The following example shows you how to correctly look at your finance deal with a trade-in. Let's say your car is a Golf 7, that has a trade-in value of R270,000 for its mileage, age, and year of registration. This value is available at dealerships of your choosing, or published in the M&M guidebook. Now, the dealer decides your car is a hot seller in their used car division, and they are willing to offer you trade-in assistance of R60,000 towards the trade-in value. They are therefore offering you R330,000 for your used car.

If you work out the Math, to the price you paid originally, this will be a great trade-in value you'll have scored on your used car which you've enjoyed over the years.

Dealer Discount

The dealership may also offer you a discount to the new car, which may be in the form of discounts to manufacture fitted or other extras the car has. This discount is deemed the dealer discount and is off the sticker price on the new car you intend buying.

Financial Services Discount

Further to the above, you could also be offered a finance discount put toward the deal by the inhouse vehicle finance, such as BMW financial services. They will then require you to take out the part finance of the new car with them, at an interest rate of say Prime + 1%. These discounts on old model runouts brand new off course can be enticing as it helps them achieve their objective of clearing stock. A R60,000 discount can be quite possible here too on a premium car.

Yes the interest rate may be a few percentage points (referring to less than 3% difference example) higher than you could get on a risk adjusted basis through a banking institution with your previous finance contract track-record, but if you're disciplined and buy within your budget and cash flow, there is good cause to aim to settle the finance contract much sooner than agreed period of anywhere between 12, 24, 36, 48 , 60, 72 months maximum allowed by SA law. In this way you're not wasting money over the long run in unnecessary interest.

Finance contracts in South Africa are governed by the National Credit Act, so whatever your terms would have been with a Bank will be consistent with an in house Car manufacturer finance such as BMW Financial Services. So you can rest assured of the standardised nature of the finance contract.

Other value added services on new cars that are a must, include things like insurance extras. Remember to consider Top Up (aka Gap or Shortfall Cover) in a total loss scenario when highly financed to retail value of vehicle; other insurance add-ons to a must comprehensive insurance is car hire, and any extras to factory fitted accessories that you believe is NOT in the retail value of the car already. Lastly, paint and care cover for interior and exterior is valuable over the finance term, especially on high end finishes, technology, premium cars that have materials that easily scratch that can be repaired at no extra cost other than the monthly affordable premium of the policy offered to you at the dealership.

Win the dealer over

When offering a trade-in vehicle that is somewhat hot, and a new / modern car - always consider trading in when the car say 15% - 20% of the maintenance plan still to run. Remember your car enters the used car division and the dealer assesses its saleability into the mix when valuing a trade-in.

Understand their objective

What they look out for is, what minor cosmetic or other maintenance work do they need to do on the car to make it showroom ready for sale. With some way to go on the maintenance, once the dealer takes ownership of the used car, it can then fix whatever needs to be done, and that is a big plus to getting their sale. Off course you will probably need to cover your end of the deal in terms of a windscreen change if there are any chips on it - a simple repair job does not make for a good used car sale, so prepare to spend on your windscreen replace excess to get the transaction through. It will be worth it in the end when that trade-in assistance hits your bank account, or used towards your new ride.

In Summary

Keep these in mind when trading in your old car for a new car.

  • Have Natis document ready as a change of ownership is going to take place.
  • Go through a financial affordability analysis (with a monthly budget income expenditure plan - can be done over the phone, but have the numbers ready)
  • Work out your monthly installment using a finance calculator.
  • Buy a runout - outgoing models with discounts offered on neat features.
  • Give the dealer some space in maintenance plan to fix a few things on your old car - use this as a factor in your trade-in value.
  • Look out for the magical trade-in assistance available on selected models only.
  • Negotiate but don't be too parsimonious. Some things are standard fees such as on-road fees, National Credit Act (NCA) initiation fee.
  • Your dealership will required comprehensive car insurance in place before you drive off the showroom floor. This can be in the form of a confirmation of cover certificate stating your new car VIN number and your name as insured.
  • Listen to your insurance agent carefully for any conditions of cover, such as vehicle inspection at designated outlets such as Glasfit within 48 hours to continue comprehensive cover - and adhere to these requirements to enjoy full cover, financial security, and peace of mind.
  • Bonus tip - find a car brand and specific dealership that you've established strong trust with in the verbal discussions on the floor - that has strong after market service, a good warranty, and one where you'd happily take your car in for a service knowing you're in good trustworthy hands. If there is no trust, walk out and go to another dealer that you know is speaking truths to you!

Being frustrated with corporate greed and its unwillingness to change and improve for the good of consumer needs, King Price Insurance was born from the seed of hope that things could change for the sake of the greater good!
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!

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