Ask any person who has to rely on parents, friends, taxis and busses for transport if they are ready for their first car and the answer will be an enthusiastic “yes!”
But when you strip away the frustration of having to rely on other people’s vehicles, you are left with the reality of affordability when it comes to having your own car. While public transport is more or less flexible and does not commit you to monthly payments, it is inconvenient and frustrating when the taxis are full or you have missed the last bus home. It also may be cheaper than car ownership in the short-term, but owning your own car is much more economical when it is paid off, especially if you carpool or travel long distances.
So how do you know if you are truly ready to buy your first car?
“Buying a car is not for the financially disorganised,” says Des Fenner, General Manager at Datsun South Africa. “It takes planning and long-term commitment to maintenance and repayments, but in many cases it is the most liberating purchase of your life. If you follow the basic rules, you will have the best of all worlds: financial and personal freedom.”
The first thing you should consider is your ability to pay for the vehicle. Even if you have saved like Scrooge and can afford to buy a car with one cash payment, you still need to think about the fact that the costs of running a car are going to take a bite out of your monthly budget. The running costs need to be planned for and kept to a minimum.
However, most people cannot afford to pay cash for a car, so financing is the most popular option.
“To finance a car, you need to have a reliable source of income and a good credit record. These are the first two things a bank will look at when considering your loan application,” says Mr Fenner. “The third element is your ability to repay the loan. You may have a good income, but if you have a lot of other financial commitments, this may work against you. The next step is to eliminate small debts, like cellphone contracts and clothing accounts. This is because too many monthly commitments may affect your affordability assessment. Additionally, if you are in a job where your income fluctuates, like having a job where you are paid commissions, you need to ensure that you can afford the repayments on your lowest pay.”
When you buy a new car, you will have the option to finance it on a lease or hire purchase. Datsun Financial Solutions (DFS), a joint venture with Wesbank, can help you choose the best payment option to suit your needs, budget and lifestyle, and they’re easily available – speak to Datsun dealer to find out more or visit http://www.datsunfinance.co.za/datsunFinance/
Making sure that you choose the right vehicle is also critical. While it may seem like a good idea to buy Uncle Albert’s 2001 two-seater convertible, you will not be sitting so pretty when you see the big maintenance bills that accompany second-hand vehicles. A new, economical car like a Datsun GO is a great option for a first-time buyer; it is affordable, stylish and runs on the sniff of an oil rag. The last thing a student or young professional needs is to be burdened with big repayments and fuel bills. And, if you are worried about maintenance, new cars offer maintenance plans that help you to budget for these costs.
In short, you should invest in a zippy economy car rather than one that will boost your ego, but bust your budget.
If you buy an older model, you may not get finance or you may be required to put down a much larger deposit. Further to this, you are stuck with what you get and any money spent on customising it is a no-win proposition, because you will not get your money back if you sell it. On the other hand, a new car usually affords you the opportunity to choose your own colour and extras at little to no extra cost.
“Provided that you keep to your scheduled maintenance dates, an economy car will keep you on the road with maximum style and minimum cost,” Mr Fenner adds.
So, when are you ready for your own wheels?
“As soon as you can comfortably afford the payments, along with the running costs, you are ready to claim your independence,” he concludes.