CRA Personal Finance & Motoring News – South Africa
By Pritesh Ruthun
Johannesburg – There’s a growing demand for non-premium cars in South Africa, which according to industry insiders could lead to a shortage of vehicles in the highly sought-after R0-200 000 price point in the coming months.
Consumers might have experienced five decreases in the petrol price this year, however, the continued lockdown is taking its toll on stretched household budgets.
In this environment, the choice to look at pre-owned, cheaper cars makes sense as these vehicles have already seen the steepest part of the depreciation curve and hold value better than brand new cars.
Smaller, less expensive cars are arguably cheaper to maintain in the long-term too.
Used vehicle websites such as Drive360 and Autotrader report a 20% increase in consumers searching pages from 11pm and 3am, with emphasis on cars priced under R200 000.
“The increased activity is coming from financially-pressed consumers who are looking to downgrade their cars so that they can free up cash,” says Susan Steward of Budget Insurance.
“In the current circumstances, it’s a no-brainer that drivers are looking at more economical vehicles. Cars under R200 000 mean a smaller finance instalment each month and can also translate to a lower insurance premium than a more expensive car,” says Steward.
More car dealerships should start trading during level three of the Covid-19 lockdown, opening up further opportunities for car sales and for consumers to rather trade-in and reduce their monthly payments.
“Reassessing your choice of car and downgrading can be a good budget decision in a tight economy. However, make sure you do your homework before you make any purchases or trade-in your current vehicle,” Steward cautions.
Buying a used vehicle means buying something that might not have been preserved or serviced and maintained. In these tough economic times, services could have been skipped, and small bumper bashings might be covered up with make-shift repairs. This isn’t to say there aren’t reputable dealers out there with good quality cars for sale, it just means that now more than ever you need to check that the car you’re interested in buying-down into is still 100% fit for duty.
We asked the AA for their top tips on buying-used under the current economic circumstances:
– Examine the engine. Look for oil leaks under the car and any obvious signs of wear and tear. The wiring in the engine bay should be in good condition.
– The radiator and cooling pipes should be free of leaks. If the engine is cool, open the radiator cap and check the condition of the coolant. This should be a transparent coloured fluid (it may be green, pink or yellow).
– When you start the engine, listen to how easily it starts and if it idles well. Rev the engine slightly and listen for any abnormal noise. Rev the engine with a short, sharp acceleration and check for excessive smoke from the exhaust. Thick smoke is a bad sign.
– The wear and tear on the carpeting and the rubber of the brake, clutch and accelerator should be consistent with the mileage of the car.
– Uneven wearing of the tyres will tell you that the wheels are off-balance, the suspension is not aligned or the shock absorbers are worn.
– Look out for signs that the car has been in an accident. These include mismatched paint on adjacent body panels, unequal gaps between the body panels and obvious signs of over-spraying (look behind the rubber around the doors and windows).
Steward adds: “Another thing to consider if you are buying down into a more economical car that’s worth less than R100 000 and it isn’t financed, you can more opt for the more affordable non-comprehensive insurance package that still gives you some peace of mind in case your vehicle is stolen.”
Article Credit to IOL.