Data compiled by WesBank during 2016 has shown that fewer people are buying new cars. The company reports that used car finance applications increased by 4.2% during 2016, resulting in 2.39 used car applications for every new car finance application.
There are various reasons for this, the obvious one being that new cars are simply too expensive. Affordability is the key issue here. Living costs continue to rise and as a result consumers are finding themselves with less disposable income. Add fluctuations in fuel prices to the mix and buying a new vehicle becomes nothing more than a pipe dream for many.
There is some good news though. In this tough and uncertain financial climate, the used vehicle market is booming. Long gone are the days when used vehicles were seen as run-down and unreliable. Even the image of second-hand car dealers has changed for the better. So, if you’re in the market for a vehicle, you’d be doing yourself a huge disfavour if you don’t at least consider buying used rather than new. Let’s take a closer look at the reasons why.
Affordability! The first and most obvious benefit of buying a used vehicle is that they’re cheaper and cost less to finance. Unfortunately, the decline in new vehicle sales has meant that there is now greater demand for good, clean used vehicles, which in turn has pushed up the price. However, going the pre-owned route still makes much more sense from an affordability point of view.
The bottom line is that a new vehicle starts depreciating in value the minute you drive it off the showroom floor and continues to drop quite significantly during the first few years of ownership. By the time you buy that same vehicle off the second-hand floor, it has pretty much done most of its depreciation. In other words, you won’t be losing a lot of money if you ever decide to resell it.
Also, remember that luxury items and added extras – such as metallic paint for instance – come at a premium when buying a new vehicle. Not so in the used market. You can get just about all the bells and whistles that a vehicle can have and not pay a cent extra for them as this cost was already carried by the first owner. In short, you get a lot more bang for your buck.
A better car for your money Let’s say you have R150 000 to spend on a vehicle. In the new vehicle market, this means your options are very limited in terms of the brand you can afford and could see you having to settle for an entry-level, lower-spec model. Apply that same budget to the used vehicle market and the choice of brands and models becomes a lot wider, meaning that you might just be able to afford a better quality car, albeit in a pre-owned state.
No waiting periods In addition, when buying a used vehicle, you don’t have to worry about order periods; you see the car you want, you buy it and off you go. Very often when buying a new vehicle there are long waiting lists which means it could take weeks and even months before you get to drive your new car.
An informed choiceWhen you buy a vehicle second-hand, any issues with that specific make and model will have been identified. You will know, for instance, if it is prone to engine or gearbox issues. This allows you to make a better-informed decision about the car you buy.
Tips for buying second-hand Once you’ve made a decision on which used vehicle is right for you, there are a few simple steps you can take to ensure that you buy a reliable vehicle.
The all-important test drive
Don’t rush it or feel pressured for time by the seller or dealer. It’s important to take your time and be sure before you buy.
- Inspect the car inside and out. Check the bodywork for obvious signs of damage or rust. Look in the boot and under the bonnet and also check the wear on the tyres, upholstery and carpets. If a vehicle is clean and damage free, it is usually a good indication that the owner was responsible and kept it well maintained.
- You should be allowed to start the car yourself as this will reveal any problems with worn components or fuel delivery and you will be able to pick up on any irregular noises and vibrations coming from the engine, suspension, steering and braking system.
- Make sure that the radio and sound system are fully functional. If the vehicle is fitted with a CD player or auxiliary and USB input points, check that they work. Also, switch on the heater and the air-conditioning to establish that they function correctly.
- If possible, both reverse and parallel park the vehicle. When doing so, listen for knocking sounds that could indicate a potential problem with CV joints or the steering system.
- Make sure that the correct documentation is available and in place. Copies of vehicle registration documents and proof of ownership can be easily obtained from the traffic department but the seller should be able to provide you with these.
If there are any obvious problems, it would be wise to get a quote on what they would cost to repair. This can be used as a negotiation point when it comes to price.
Ask the professionals
Lastly, it would be wise to insist that the vehicle undergo a Dekra Technical Inspection or Multi Point Check. This will give a clear indication of the condition of the vehicle as well as identify any underlying issues.
For every budget conscious South African consumer in the market for a new car, buying a used vehicle should certainly be carefully considered.
Sources: WesBank, Gumtree
The views and opinions expressed in this article are those of the authors and do not necessarily represent or reflect the views of 1Life or its employees.