How to buy your first car

All you need is a cupcake and a road trip. And a car.

Before you get your license you dream of the endless road trips you’ll take with your friends, with indie rock music, high-waisted shorts and sunsets at the beach. You dream of the type of car you want, you don’t think of fuel, insurance or how to get the car in the first place.

So when the time finally comes for you to buy a car so you can live those dreams, you have no idea what to do first. So here’s a step by step for buying your first car. What you’ll need, what you need to look out for, some tips, some trips and some boring fine print.

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What you’ll need:

Ps. This article is based on South Africa.

1. A bank account

This seems logical for most, but when you’re only 18, many of you functioned on a cash basis. So go to your local bank (look for a bank that offers most interest on savings, and preferably one with a Car finance department. I went with Nedbank that had MFC.

2. Debt

Funny how the system works, to make debt you need to have debt. The easiest way to make debt without a load of paperwork is to open a clothing account at one of your local stores, I opened mine at the Fochini Group. Buy something small and pay it off, do this for about 3 months. This will help you to get a positive credit score.

3. Savings for a deposit

The car sales man will often tell you that you won’t need a deposit, but if you can put a deposit down on your car, the interest will be lower and you’ll pay off the car quicker. The usual standard is a 10% deposit. So if you’re buying a car for R 150 00, you’ll need a R 15 000 deposit.

4. Papers

You’ll need all kinds of different papers, a copy of your ID, bank statements, pay slips, copy of your address and so on. They’ll tell you what you need as you go forward. Keep in mind that the % of interest you’ll pay is influenced by a number of factors. My interest was lower because I have a degree, and I worked at a Financial services company at the time.

5. A Car!

It’s time to look for your dream automobile. If you buying second hand, I prefer to buy the car from a dealership, because they have a legal obligation to disclose certain information to you, and I just overall prefer to work with a professional rather than buying a car from someone’s backyard. The best, of course, is to buy a vehicle from someone you know.

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Things to look out for

1. A chancer

If you are buying from a private sale, ask someone you know that knows a lot about cars, or your local mechanic to go with you to go look at the car. Ask questions like:

“How many people owned this vehicle before you?”

“Does it have a full service history?”

“Is it a code 3 car?”

“Has it been in any accidents before?”

“Can I see the paperwork of services?”

“Was the car parked in a garage?”

“How many kilometers does it have on the clock?”

You local mechanic will be able to point out some other important factors you need to ask about.

2. Rust

If you’re buying a slightly older car, look out for rust. This can be very expensive to fix. Look all around the doors, the tip of the bonnet, and around the wheels, as well as the edges of the roof.

3. General problems

You might buy the car from a lady that knows nothing from cars, and is unaware that something is wrong with the car, again, ask someone to go with you.

4. Sales tactics from salesmen

Unfortunately I made this mistake. The salesman somehow made me sign off on a bunch of extras on the car I didn’t even know about, causing me to pay about and extra R 20 000 for the car, without my knowledge. When you purchase a vehicle from a dealership, make it very clear what you want. For example tell them that you just want the car and a basic maintenance plan, nothing else. Or just the vehicle. Double check this before signing.

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Things to remember:

1. Take your time

You might be in a hurry to buy a car, but take your time, if your gut feeling makes you uncomfortable, you are probably right and should keep looking.

2. You’ll need insurance

Ask your parents or friend where they did their insurance and if they’re happy with it. I did my insurance through Mutual and Federal, and I absolutely love the insurance, as it covers almost every incident, and is very affordable. The installment even decreased last month. Insurance is not optional if you are buying your vehicle with finance, as the vehicle will belong to the bank until you have paid for it completely. If you buy the car cash, I still strongly recommend car insurance.

3. Ask for discount

Another mistake I made. If the car salesman tells you the car is R 150 000, ask for discount. He’ll likely agree to come down with the price. I literally forgot to ask, and paid the full first offered amount. Only once his buddies congratulated him on the sale while I was still sitting there, I realized I should’ve to asked for discount. But I had already signed everything and was just ready to pick up my new car. I felt so stupid. Don’t make the same mistake!

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Final tips

1. Extra keys!

If you didn’t receive a spare key, have one made immediately. My handbag was stolen a while ago, and my car keys was in it. It only cost a few bucks to have a duplicate of the spare made, where it would’ve cost thousands if they had to come to the car to have a new one made without a spare.

2. Pay it off asap

I wasn’t lucky enough to buy my car cash at first. So my husband and I put every penny we had extra towards the car, and after 6 months of owning the car, we’ll make the final payment next month, instead of 5 and a half years from now. Your monthly installment only pays a minimum off the amount you owe, the rest will go towards interest on the car.

It was tough to cancel certain plans with friends, not take a weekend away, not but the shoes and not go on dates for a few month. But we are on the verge of being debt free, and the bank barely made any interest off us. Yay!

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How we paid off our car in 6 months:

Work out a budget. You have certain debit orders that needs to go off your salary, like your medical aid, rent, cell phone etc. Then put a small amount aside for groceries, a small amount for fuel (work it out), and a small amount for entertainment. The entertainment part is important, because I guarantee that you’ll want to go for coffee with a friend, or go for a hair cut , and to avoid disappointing yourself by using your savings, just put money aside for it from the get go. STICK TO YOUR BUDGET!

The rest of your salary you pay into s 24 hour savings account. You need to drive all the way to the bank to free that money, and it will only be available 24 hours later. This prevents impulsive spending.

Every single penny we made extra we saved. My husband gave extra CrossFit classes at the local gym, he put that money away, we looked after people’s pets, sold some of our stuff, house-sitted, did extra jobs etc. We did whatever we could to pay off the car. And the reward is definitely worth-it.

So there you have it. I’m not sure of I left anything out, but this was my experience of buying a car. And it was a journey where I learned a lot from my mistakes. If you have any questions, feel free to ask me.

 

 

 

2 thoughts on “How to buy your first car

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