STELLALANDER-VRYBURG: Purchasing a car for a student heading off to university or college is a significant decision - in many ways that new set of wheels is a rite of passage, symbolising mobility, freedom and independence.
This is according to Charl Potgieter, managing executive at Absa vehicle and asset finance.
Potgieter offers these tips:
Set a budget - Consider not only the purchase price but also ongoing costs such as parking fees, licence fees, insurance, maintenance, fuel, and potential repairs.
New or used? - To make an informed decision, compare the pros and cons of both new and used vehicles. Ultimately, the chosen vehicle should suit a student’s lifestyle.
Reliability - Research vehicle reliability to minimise maintenance costs and unexpected repairs. Consumer reports and car review websites offer valuable insights. Consider purchasing an extended warranty for added peace of mind.
Fuel consumption - Fuel-efficient cars, such as hybrids or compact models, can save significant money over time.
Go for a spin - Test drive different vehicles to determine which one best fits your preferences and expectations.
Financing options - Potgieter says buyers must explore various financing options if they are not paying cash.
Here are some key points to consider:
Loan terms: Consider the length of the loan term. Longer terms may result in lower monthly payments, but can cost more in interest over time.
Deposits: A larger deposit can reduce the amount you need to finance, potentially lowering your monthly payments and the overall interest paid.
Pre-approval: Do this to get a better idea of your budget and streamline the process at the dealership.
Balloon payments: A balloon payment means you pay smaller monthly instalments, but a big chunk is due at the end. A balloon payment translates to lower monthly instalments, no deposit, and the car can be sold at the end of the loan term, with the proceeds used to pay off the loan.
Consider insurance costs: Insurance costs can vary greatly depending on the car model, the driver’s age, and driving history. Get insurance quotes for different vehicles to understand the potential costs and choose a model that is cost-effective to insure.
Negotiate: “Many people are under the impression that interest, insurance plans and maintenance plans are always offered as a fixed rate,” says Potgieter. “But if you do your research and understand your costs, you will be able to get a better price with any banker, credit provider or car dealer. Just remain realistic and always read the fine print.”
