When most people in South Africa buy a car, they look at how much they will pay per month.
This was stated by the spokesperson of the WesBank car lending bank, Lebogang Gaoaketse, who said that it must be considered whether a person will be able to withstand all its expenses or whether it will be a long-term financial pressure.
He said the joy of buying a new car should not interfere with financial stability.
“If buyers take the time to understand all the financial commitments, ask the right questions and do the research they find themselves in a better position and more comfortable owning a car than always worrying about money,” said Gaoaketse.
According to Gaoaketse, the following are what buyers should consider before buying a car:
What will happen if your situation changes?
He said that life does not follow a certain goal. It could be a job change, you’re blessed with a child, you have medical expenses or a job that forces you to move, all of which can affect your monthly car payments. Clarifying, he said that to see if you can resist the car, you should look at all the situations that may arise, not look at the salary.
“Can you afford it if your income drops by 20% or your monthly expenses increase unexpectedly?”
What will protect you if you can’t work?
Gaoaketse said that contracts to buy a car are usually five years or more. He warns that at this time illness, layoffs or other situations may occur. He said that consumers should know about things that can protect them such as insurance called credit life, asking for a payment break and so on.
What is the real cost of car ownership?
Gaoaketse said the price the car costs is just the beginning. Some of the costs in addition to the purchase price, affect the insurance fee, the price of petrol, maintenance, the increase in interest on the loan and its price adjustment. He said the cost of a car that you pay R5 000 per month can reach R7 500 when you calculate everything.
How does a deposit reduce future risk?
The deposit reduces the amount you borrow, lowers your monthly payment and also reduces the loan interest you pay, says Gaoaketse. Borrowing more money than you can sell it at that time can put you at risk if it has to be sold or is badly damaged beyond repair.
Gaoaketse said buying a car is easy but it is important to understand everything before you sign a loan agreement.