The Ultimate Guide to Buying a Car in SA
|Buying a car in South Africa is fairly simple and straightforward.|
The Ultimate guide to Buying a Car in SA
Hello there! If you’re considering getting a new car, please take a minute or two to read this article. This guide will hopefully answer any questions you might have about how to buy, finance or insure a car in South Africa. We also list the documents you need to buy a car in South Africa, as well as the sales process of buying new or used vehicles. Please use the index to navigate through the article and find the information that you need. Feel free to check our website for new and used cars to sale from registered and reputable dealerships in SA.
Why People Buy Cars
Making the decision to buy a new (or new to you) car is about much more than wanting an exciting change. It’s usually because your current car doesn’t fit your changing lifestyle or budget anymore. It could also be that a newer model of your current car is available for a trade-in and you can comfortably afford to upgrade. The worst-case scenario is that your car was stolen or written off in an accident. If you’re in the market for a new car, you need to understand how you can buy, finance and insure your purchase.
Many people will tell you that buying a new car in South Africa is one of the worst financial decisions you could make. While it’s true that you could save a significant amount of money if you buy a car that’s two or three years old instead, new cars have some great benefits. There’s a reason why countless South Africans are driving off the lot with brand new cars.
- Better finance rates and warranties - Buying a new car could mean that you’ll be paying a lower interest than you would have with a second hand car. You will most probably receive a one- or two-year warranty from your chosen dealership when you purchase your car.
- Broader selection - You won’t be limited by what’s available like you would when buying second-hand. You can choose the features, accessories and colours that you want.
- Better resale value - You’ll hopefully have quite a few years of fun and excitement with your car before needing to sell it again. When you buy a new car, you can sell it again one day without it being too much of a loss. Your car will most likely get you much more thanks to its mileage and history than a car that’s been sold several times.
- Current tech and features - You don’t have to settle for a car without modern tech. New cars come with modern safety features, great accessories and all the new technology you might need. Better yet, if any of these features malfunction within the first year, you can have the repairs done under warranty.
- Depreciation - Here comes the age-old problem of buying new cars. You’ve been warned about your new car losing half its value the second it leaves the lot. While the reality isn’t nearly as drastic, your car definitely depreciates quickly. Your car will depreciate about 15% per year.
- Insurance - Insurance for new cars is a bit pricier than that of second hand cars. That’s because some dealerships require you to fully cover your car until you’ve paid it off. The newer the car, the higher the premiums are.
- Overpriced - New cars are damn expensive, there’s no way around it. You could technically buy the exact same car after two years and pay 30% less for the same features.
Buying processBefore driving off with your new purchase, you need to go through a specific buying process. This process might differ from dealership to dealership, so make sure to enquire about it before hand. The general steps should look a little like this:
- Go through a credit check.
- Choose your finance plan (read more on Financing below).
- Get your loan pre-approved.
- Choose the car that you’d like to buy.
- Apply for a loan.
- Get vehicle insurance (read more on Insurance below).
Documents You Will Need
Your chosen dealership will most likely take care of the relevant paperwork for you, but you might need the following documents when you go to the dealership:
- driver’s license
- proof of insurance
- your insurance agent’s contact information
- current pay stub
- proof of residence
Demo cars are new cars that have been used for test drives and rentals from a registered dealership. These cars are usually put up for sale after one or two years of being test driven. These cars are a popular choice for those who want a fairly new car without the hefty price tag of a fresh-off-the-lot car.
- Great price - Demo cars are a cheaper option for those who would still like modern safety features and technology.
- Most problems have been fixed - Demo cars that are a year old are generally safer than brand new cars thanks to fixing any problems that may have arisen during the first 12 months.
- Higher mileage - These cars are called demos for a reason. They of course have much higher mileage than new cars due to being used for staff use and test drives for a year or two.
- Less variety - You won’t have a massive variety of colours and specifications to choose from when you’re looking for a specific demo model.
The buying process for a demo vehicle is almost exactly the same as buying a new vehicle from the same dealership. Make sure you speak to your sales representative about the documents and financing you’ll need to buy that specific car.
Second hand or pre-owned cars are what most people tend to look at first. These cars have usually had more than one owner in the past and buyers are advised to check a pre-owned car's history before doing anything else. There are certain risks involved in buying second hand cars from private sellers, but there are reputable and professional dealerships that can help you find an affordable and reliable pre-owned car without too much hassle. If you would like some more information on what to look out for when buying a second hand car, feel free to browse through our blog.
- Cheaper - The low price is the biggest perk of buying a pre-owned car in South Africa. They can be almost 50% cheaper than a new car and still be in great condition.
- Better insurance - Like we mentioned earlier, the newer the car the higher your monthly premiums will be. With pre-owned cars, you’ll have lower interest rates and therefore lower premiums.
- More repair costs - Pre-owned cars aren’t lawn ornaments – they’ve been driven and, in some case, driven hard. That’s why we advise against buying supercars or sports cars second hand. The odds are high that the previous owners got the most out of their cars before trying to sell them. These cars could come with dozens of repair problems.
- Limited Choices - When buying a pre-owned car, you need to set up a list of features that you need, an ideal mileage and your preferred price. After all this, you might not be left with a wide variety to choose from. You’ll also have to wait until you find your “perfect” car, which could take quite a while if you're not willing to compromise.
- Lower resale value - The older your car gets and the more mileage it has, the less you’ll get for it if you ever decide to sell it again. A car that changes hands every two years will never sell for the same value as a car that has had one owner. This is because buyers tend to wonder why a car is being sold again so quickly after it was bought.
Documents You Will Need
- Sales Agreement between you and the seller.
- Change of Ownership forms obtained from local licensing department.
- Have a Roadworthiness Test done.
- Have your insurance in place before driving off with your new car.
- Register your vehicle. You will need to go with the seller to a registration office and bring the following:
- ID or Passport
- The seller’s vehicle registration certificate
- A roadworthy certificate
- Sales agreement or a receipt as proof of purchase
- A valid licence
- A completed RLV – Blue form for registration and licencing
- Application fee
Trading in your car can be described as having a dealership buy your car from you and using that money to cover the majority of the cost of a new car.
- It's simple - The dealership you choose to trade in with will usually take care of most of the admin issues and paperwork. You'll simply have to sign when they ask you to. This saves you the time and effort of marketing and selling your car yourself.
- It’s fast - Like we mention in the previous point, selling your car privately takes time and effort. When the dealership buys your car from you, it could be done in a matter of days.
- It's affordable - Dealerships love new car sales, which means that they'll do everything they can to help you buy your new car. You could also received a reduced price on a new vehicle.
- It's not as cheap as pre-owned sales - You won't be getting retail price for a new car, despite trading in your old car. If your car is older or not in great condition, you might receive less than you would from a private sale.
- Limited choices - You'll be limited to the stock that the specific dealership allows you to choose from.
Trading in your car still involves financing and insurance, because the capital that you carry over from your old car's trade-in is usually not enough to cover the entire cost of a new car. Make sure to speak to your dealership to hear more about their specific trade-in processes.
Documents you will need
- Proof of ownership
- A settlement letter from the your finance provider
- Roadworthiness certificate
- NCO (yellow) form: A Notification of Change of Ownership form
- Receipts and service history
Most people can’t afford to buy a new or used car cash. That’s why countless South Africans turn to vehicle financing to help them pay for their car. There are several different kinds of financing, but we’ll only be discussing three of them below.
This type of finance is great for getting your own car (as opposed to a company car). In this case, your car is considered as loan security. Like all loans, make sure to read the fine print and know what exactly you’re paying for.
Basic personal loans
These loans are more varied and offer more freedom to you. You can buy older cars (10+ years), imported cars and more and still finance your purchase. You will, however, need loan security other than your car.
Business car loans
You can finance a car for business use if you’re a business owner. You can also choose to lease a vehicle instead of purchasing one.
This type of insurance covers the most (hence the word “comprehensive”). It covers your vehicle in case of damage (accidental or weather conditions), theft and hijacking. It also covers the costs of an accident if you’re the one responsible for it. This tends to be the most expensive kind of insurance.
Third party, fire and theft cover
This is quite similar to comprehensive coverage but it doesn’t cover accidental damage. For example, your car will be covered in the case of theft, but not if you’re in an accident. It does, however, cover any damages to a third party’s vehicle if you were responsible for the accident.
Third party insurance
This kind of insurance covers any damages or injuries of a third party if you were responsible for an accident. Your own vehicle’s damage or theft is not covered and you’ll have to pay any costs out of pocket. This also tends to be the most inexpensive type of coverage.
There you have it for our ultimate car buying guide in South Africa! We hope that we’ve covered most of your questions about how to buy, finance and insure a car. If you’re in the market for a car, feel free to take a look at our website where we list new and used cars for sale in South Africa. If you have any other questions about how to check a second hand car before buying, how to finance your car or how to insure your car, please let us know in the comments below and we’ll get back to you as soon as possible.