You are currently viewing our desktop site, do you want to visit our Mobile web app instead?
Complete our online survey and
get 10% discount on our
Insider Gold annual subscription.
 Registered users can save articles to their personal articles list. Login here or sign up here

New or Used? What you should consider when you buy a car

Eleven factors to consider ahead of buying a car.

Over the course of this year, the new vehicle market in South Africa has been under some strain as consumers opt for better value and greater affordability in the second-hand market. This can be attributed to a myriad of economic factors including: raised cost of living, a weakening rand and higher interest rates. As consumers’ budgets shrink, investigating purchasing used cars to stretch every rand becomes more important.

When making the new versus used decision, each of us must examine our unique set of financial and life requirements. A little introspection is good for the soul and the wallet. For most people, we think it makes more sense to buy used, but there are some exceptions. 

In order to make a smarter choice for yourself and your future, you must consider a few factors:

  • In order to keep from making a regrettable purchasing decision, you have to consider various factors including the selling price and additional costs. Determine your budget and then see what’s available in the market.
  • Ask yourself: Is the car worth the price? There are many extra costs to keep in mind, like the current interest rate and how it affects the selling price of the car. Insurance costs also increase with older cars.
  • Also consider whether you have a down payment or can trade-in with equity.
  • Look at the affordability of a maintenance plan, as well as the cost of possible repairs and parts. New cars also typically come with a full manufacturer’s warranty, which will give you an easy way to have many faults repaired for free.
  • Look at the condition of the car, which depends on how well the owner has taken care of it. A good seller will always have a service book with a full service history available.
  • Take the car out for a test drive and when doing so, check the vehicle’s mileage on the clock. An older car with a lower mileage is likely to be in a better condition than a newer car that has clocked up a high mileage.
  • Look over the body of the car to check for any dents and scratches, as well as for paint ripples or over-sprays, which may be covering up signs of an accident.
  • When you are ready to buy a used car, make sure you choose a reputable used-car dealer who will provide you with assurance that the cars have undergone inspection and checks so that you know they are in good condition.
  • While buying from a private seller may bag you a better deal, you will have to sort out the paperwork yourself. There is also a greater risk that you might be misled in some way over the true condition of a used vehicle.
  • Some of the additional drawbacks of buying a used car are that you may be more likely to develop problems from wear and tear as it costs more to maintain a used car.
  • Moreover, you cannot choose the specifications of a used car like you can with a new car.

Faisal Mkhize, Managing Executive of Absa Vehicle and Asset Finance.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

COMMENTS   11

You must be signed in to comment.

SIGN IN SIGN UP

“reputable used car dealer”????
I am sure there are but I have never found one.

BMW330i for me and my missus!!!

Nice choice, performance wise! 😉

Oi…but to expect your poor missus to be contend with a 3-series? She won’t be noticed while driving! 🙁 She needs a trendy & chick FIAT 500 cabrio, that WILL stand out from the crowd! That is style she’ll happily accept.

Buy “style”, not “fashion”. “Fashion comes and goes, but style remains”.

A FIAT 500 is one of those (rare) small/cheaper cars that you can park alongside your Aston Martin or Maserati in your driveway, and it won’t look out of place 😉

BMW/MERC/AUDI is like fashion. The cars’s shape will be forgotten when the next face-lift arrives. The Fiat 500 is timeless. Your missus will thank you 😉

I once owned a Uno..it never stopped giving me trouble, but damn this little bugger was light on fuel, it virtually, you can say it ran on fumes from other cars. FIAT is coined as First In All Troubles…neigh sorry… fiat, not me….best car on the market for us now, tried and tested, HONDA…ask my misses.. she knows whats getting stuck in traffic feels like.

Will it suit a +- 70 yr old divorcee????

In many cases, the “golden” period is a used vehicle in the 2-3yr age range: generally 60,000km and still “new enough” to last a long time before maintenance becomes as issue, and with a few years of factory warranty still intact.

Plus with a large chunk if depreciation (kindly) borne by 1st buyer. The difference in lower cost, usually makes up more than enough to cover sooner maintenance.

Strange as it is, you have people that are too afraid to buy (good) used, fearing say a R50K engine, gearbox or turbo replacement job…but at the same time, not afraid to spend say a few hundred thousand more for a brand new vehicle. You’ll lose a R100K or R200K after the 1st year or two…so why be afraid of a (potential) large repair job on a used car?

Pascal’s wager applies:
(A) If you buy new, you will be hit (100% chance) by a large drop in initial depreciation (i.e. money you “over paid” the real market), OR
(B)…buy used, save 40%-50% in cost, but risk say 10% (or less) on major repairs. If no major repairs, you win.

Balance goes to share portfolio….

Resale value on my nearly-new Fortuner performing better than my share portfolio at the moment!!

Gold

STAY AWAY FROM BALLOON LOANS THEY HURT YOU WHEN YOU HAVE TO REFINANCE THE VEHICLE and IF YOUR CAR IS NOT WORTH THE BALLOON , HOW DO YOU GET THE LOAN?? GAME OVER YOU LOSE!! Dr. Debt

Sometimes dealers offer huge discounts when a certain car changes shape or facelift. Then it’t worthwile to buy new…..or maybe if you plan to keep the car for 20 plus years.

Otherwise buying new allmost never make financial sense.

All my cars are assets and go up in value every year. All are 30 years plus old and are probably more reliable than any new car today.

I think its also not wise to spend more than 1% of your nett worth on a car.

1% of nett worth? I could never own a car then.

Load All 11 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: