By Staff Writer
Buying your first car, whether you’re fresh out of university, finding your independence again, or finally ticking it off the bucket list, is a big moment. It marks freedom, opportunity, and a step forward. But before you sign on the dotted line and take those keys, there are important decisions to be made that could save you thousands in the long run.
In South Africa, we often forget that buying a car, whether brand new or pre-owned, is likely the second biggest purchase you will ever make after buying a home. For first-time buyers, the process can feel overwhelming, especially when faced with industry jargon that sometimes seems designed to trap you in debt for five to seven years. But it doesn’t have to be that way. If you approach the journey with your eyes wide open and understand your options, you can avoid unnecessary heartache and keep more money in your pocket.
This week, we focus on helping you make smart, safe financial decisions, so you can
drive off the showroom floor with confidence and peace of mind.
Finance 101: What Are Your Options?
If paying cash isn’t possible (and for most people, it isn’t), then you’ll likely be
considering finance. Here’s a quick guide to the most common options you’ll encounter:
- Instalment Sale
The most straightforward option. You agree to monthly payments over a fixed term (usually between 56 and 72 months), and once the last payment is made, the car is fully yours. Ideal if you plan to hold on to the vehicle long term.
- Instalment Sale with Balloon Payment
This lowers your monthly repayments by pushing a lump sum (the balloon) to the end of the contract. Just be sure you’ll have the funds or trade-in value to cover it when the time comes.
- Guaranteed Future Value (GFV)
This option locks in your car’s resale value at the end of the contract, typically after three or four years. You pay for the depreciation rather than the full value, which can make for lower monthly payments. At the end, choose to keep it, return it, or trade it in.
Protecting Your Investment: Know What’s Covered
Once you own the car, the real cost begins — maintenance, repairs, and keeping it roadworthy. A clutch replacement can cost upwards of R10 000, and gearboxes even more. So, understanding what’s included in your deal is crucial.
Service Plan vs Maintenance Plan vs Warranty
A service plan covers scheduled services (oil, filters, etc.).
A maintenance plan includes wear-and-tear parts like brake pads and wipers.
A warranty covers mechanical or electrical faults, especially valuable with new vehicles.
Ask what your car comes with and how long it lasts. Then decide if you’ll extend cover, start a car savings fund, or trade in before costs mount.
Before You Drive Off…
The excitement of collecting a car can easily overshadow the fine print. But the decisions made in that finance manager’s office will affect your pocket for years.
So, ask questions. Know what you’re signing. And consider not just what you can afford today, but what you’ll manage comfortably three years down the line. Owning a car should unlock your life, not lock you into debt. Drive smarter. Spend wiser. And always plan ahead.
Information supplied by Wesbank and JustMoney.co.za
