FirstCheck App

car market doom and gloom

Is it all doom and gloom in the local car market?

I can’t even recall how many times I hear someone comment on South Africa’s car market and just how expensive cars are these days. And while I cannot agree more (I would struggle to afford a car myself), the local car market has tried to do what it can to remain affordable. New vehicle price increases have remained below inflation for more than two years now. Despite this, the number of new vehicles financed in Q4 of 2019 – a key indicator of sales – fell 1.6% compared to the same period a year ago, although the number of used vehicles financed showed a 1.4% increase. According to the latest TransUnion SA Vehicle Pricing Index (VPI), the South African car market will remain depressed for the foreseeable future, despite the interest rate cuts and fuel decreases. Kriben Reddy, head of Auto Information Solutions for TransUnion Africa, says, “The major issue facing the local automotive industry is the need for structural reform at a macro-economic level. We need to see sustained positive economic growth to get the new car market moving, and the challenge is that in 2019 we weren’t there. The problem is, it is unlikely that this situation will change in the short term, indicating that we may continue to battle for some years yet…” IT’S NOT ALL BAD NEWS Thankfully, it is not all doom and gloom. Export sales of South African built cars grew 17.7% in 2019 over the previous year, providing some measure of relief for local manufacturers. “Exports provide a bright spot by retaining jobs and keeping production lines going, but they are still a relatively small part of greater sales,” says Reddy. GOING PRE-OWNED The report also shows that the used-to-new vehicle ratio has increased from 2.03 in Q4 2018 to 2.09 in Q4 2019, which means that for every new vehicle financed, 2.09 used vehicles are financed. In the used vehicle market, more than 36% of used vehicles are under two years old, with 6% of those being ex-demo models. This indicates that consumers are opting for older vehicles as pressure on disposable income increases, said Reddy. For the past seven quarters, the percentage of cars (new and used) being financed below R200 000, R200 000 – R300 000 and over R300 000, remains the pretty consistent. This proves that people are spending less on cars and opting for less expensive cars. NOW FOR THE GOOD NEWS Reddy says the good news for consumers entering the buying market is low price increases, low inflation rates predicted for 2020 and a range of marketing incentives from dealers, which include trade assistance to vehicle discounts. “The challenge is that to get a customer into a new vehicle, you have to get him out of the old vehicle first. And in many cases, the very deal structures that are meant to stimulate the market – like offering terms of to 84 months on car finance – are having the opposite effect by taking customers out of the market for longer. If you take a deal over 54 months, conventional wisdom is that you’re going to be back in the market after 36 months. Over 84 months, you’re taking that customer out of the market for another 1-2 years,” said Reddy. Don’t forget to download the FirstCheck app to find out the true value of your car. That way, you will know what you can afford when buying yourself a new, or used, car.

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sell firstcheck app

How to find out the true market value of your car

Just the other day a family member was telling me how they have struggled to sell their car because most of the places they have approached have offered them so little for it. When I asked what the market value of the car was, they weren’t sure. This is a common problem among car sellers. It can be difficult to determine the market value of a car. Then there are the issues of buying a car. How do you know if a car has been stolen or if it has a full service history as the buyer claims? Introducing the FirstCheck app. Together with Transunion, this app is now providing consumers with information that was previously reserved for car dealers, banks and insurance companies. Basically, as a consumer, you now have access to the bank and SA Police Service databases to check if a car is finance, flagged or stolen. As head of Auto at Transunion Africa, Kriben Reddy, says, “Knowing the value and history of a car means you’re far more empowered when you enter the buying cycle. With this app, you’re not only able to put a fair price on the car upfront, but you’re also far less likely to fall victim to fraudsters by having insight into the full history of the vehicle.” So what exactly does the FirstCheck app offer? THE VALUATION REPORT The valuation report provides both current trade and retail values to ensure the price being asked reflects the vehicle’s true market value. This also helps consumers ensure they are paying the correct insurance premiums. It also offers a view of how much the vehicle has depreciated over the past 12 months, and projected future values. THE VERIFICATION REPORT The first part of the verification report provides the car’s original manufacturer information, including vehicle identification number (VIN), engine number and colour, and highlights any discrepancies. The second part follows the vehicle through its lifecycle, as it were, with full financing information, legal status and even mileage at certain points. The verification report also tells a purchaser if a car has been “microdotted” – where a car is marked with thousands of dots. If so, potential buyers can use a microdot scanner to check if body panels and even engine parts have been replaced. If you are in the market to buy or sell your car, I highly suggest you download this FirstCheck app.

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car finance

Financing a car? Let me tell you what you need to know

I often wonder how people can afford to buy cars. Especially when they are over the R200 000 mark. I don’t know about you, but I don’t want to live beyond my means and if I had to finance a R400 000 car, I certainly would be. But there are ways and means of owning the car you really want. It just might mean being a little clever about it. The head of Auto Information Solutions at TransUnion Africa, Kriben Reddy, lists three options when it comes to financing your car. Each one has its advantages as well as disadvantages, so you should take note of his guidelines. My only advice is, be really smart about your choice of car. Work out your spending limit and stick to it. INSTALMENT SALE This is the most popular option but one should understand that not all deals are created equally. You can lower your monthly premium by taking out a balloon payment, BUT, it will cost you a lot more in the long run. The same goes for if you decide to make the repayment term longer. Paying off a R200 000 car in the shortest amount of time, with a deposit, could save you more than R60 000 over 6 years – over 30% of the purchase price of the car. The upside It’s all yours when you make that last payment. Financial freedom – until you buy the next one, that is. No limitations to vehicle use. It’s yours – and as long as you’re happy to pay for the services and fuel, you can drive it how you like. The downside Depreciation. A car’s value starts dropping the moment you drive it away from the dealership. It’s not an asset. Hassle. It’s up to you to dispose of it or sell it when you want to trade up. Maintenance and insurance. Because it’s yours, the responsibility of insuring and servicing it is yours too. Balloon payments. If there’s a balloon payment, you’ll have to come up with a big chunk of money – or refinance the amount, which can get you caught up in a debt spiral. FULL MAINTENANCE LEASE A Full Maintenance Lease (FML – and not the F my life version) is whereby you rent the vehicle for an agreed period of time. You pay a monthly fee, which covers all maintenance costs (including services, tyres, oil filters, wiper blades etc), and at the end of the term, you hand back the car and get a new one. This is provided you have stuck to the terms of the agreement. The upside: The monthly repayments are often lower on an FML than on an Instalment Sale. You get a new vehicle more often. No hassles around getting a trade-in on your old car, or having to sell it privately. No nasty surprises at the end of the term with balloon payments. The downside: Even though you pay for it every month, you won’t ever own the vehicle. You aren’t able to go on long road-trips. There are strict limits on the maximum number of kilometres allowed, with severe penalties for exceeding them. There is a penalty to get out of the contract early. GUARANTEED BUY-BACK This is when the bank and the buyer agree on a value that the car can be ‘bought back’ for at the end of an agreed period. The upside: You can possibly end up paying lower monthly payments than an instalment sale. You can shorten the period of ownership – which again means a new car more often. The downside: Like the FML route, deals like this come with strict terms around the upkeep and mileage of the car, and you could be subject to penalties if these conditions aren’t met. You pay insurance for the car. If you are in the market to buy a car, have a look at CARmag.co.za’s list of cars for sale. And if you are selling your car, be sure to download the FirstCheck app to get all the information you need about your car. As soon as you have found a car you want to buy, use this app to find out everything you need to know about the car’s history.

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Buying a car

This is the biggest mistake you’re making when buying a car

Most people base their decision on price when it comes to buying a car. This is a mistake! You need to look beyond what the car costs. You need to look at what it will cost you to own the car, not just purchase it. The first question you should ask yourself is whether you want to buy new or used. There are pro’s and con’s to either. BUYING A NEW CAR There are still many costs you need to consider even if you are buying a new car. Things such as fuel and insurance costs come to mind. Your fuel cost will be determined by how many kilometres you generally do in a month. Do you need something for around town or will you use the car for long distance driving? Insurance costs are obviously higher the more expensive the car is, so make sure you can afford the monthly payments. When it comes to the finance side of things and financing a car, be sure that you have read and understand every single term and condition of the contract. Balloon payments make it easy to buy a car you would not necessarily be able to afford, but that does not mean you should buy it. You might be able to afford the repayments now but at the end of the loan, you will have a lump sum that you will need to cough up. Only consider a balloon payment if you really know what you’re doing and you are certain you will have that money when you need it. BUYING A USED CAR Buying a car that is pre-owned, although cheaper than new, has its own set of criteria to consider. You need to do a lot more homework when it comes to buying used cars. The most important of which is to find out what the market price is of the car you’re interested in buying, whether or not it is still under finance, and what its full history is. You always want a car with a full service history! It can be the difference between loving the car you drive or hating the piece of rubbish you bought. TransUnion is a very handy site that will be able to provide you with a lot of answers to your queries. The best place to get all the information you need on a car is through TransUnion’s FirstCheck app. Try it, you will be thrilled with your choice! MAINTENANCE IS KEY Another huge mistake South African’s make is overlooking the maintenance costs of a vehicle, especially when it comes to buying the more premium and performance models. It is all well and good to be able to afford the price tag of a 10-year-old BMW M3, but can you afford the R2 000 oil change or the costs involved in servicing such a car? Give it a LOT of thought! DO YOUR HOMEWORK This is a huge purchase you’re about to make. And it is not an investment like many people think. You will not make your money back on the car you buy. So make sure you have done all your homework. Run the numbers again and again until you get to a point where you are truly comfortable with making the purchase. There are always unforeseen costs that creep up, it is inevitable. So be prepared. If you are in the market for a car, whether new or used, I know the perfect place to find it.

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