As the saying goes, prevention is better than cure and this applies to vehicle maintenance too!
There are 3 main types of maintenance service your vehicle needs and in order to get the best out of your vehicle and to keep it running optimally, all motorists should adhere to the car manufacturer’s service intervals.
When it comes to the type of service your vehicle is due for, largely depends on your car’s mileage. These are the different types of scheduled maintenance options:
Basic service: This type of service is the most common and is routinely performed. In most cases it includes an oil change and oil filter, air filter and fluid checks, and is usually scheduled at 10,000km or 15,000km intervals. However, you should always refer to your car’s service book or speak to your Original Equipment Manufacturer (OEM) franchise dealer for information.
Advanced service: This service is generally set at further distance and time intervals, and can include the replacement of spark plugs, fuel filter, and pollen (cabin air) filters among other things.
Major service: This is performed at even greater time and distance intervals. Major services can include the replacement of critical items such as timing belts and/or timing chains, and a detailed inspection of various mechanical components in your vehicle.
Aside from the actual work performed, a service is also an opportunity for the technician or mechanic to inspect things that you as the owner may not be aware of. Compare it to a visit to the doctor: you can either go when you have an illness, or you can go for a regular check-up and see if they pick up a problem.
Servicing your vehicle means that you will always be aware of the condition of your vehicle. For example, you may not know if your car needs a new wheel bearing or shock absorber, or that your brakes are nearing replacement time.
“Regular services allow the technician or mechanic to check for and inform you of any problem or issue before it becomes costly to replace or even fails completely, which could place both the vehicle and your safety on the road at risk. Mitigating risk at every turn is your responsibility as a vehicle owner,”says Kutlwano Mogatusi, WesBank’s Communications Specialist.
It is important to look after your vehicle by servicing it regularly and in accordance with the manufacturer’s stipulated service intervals.
Everyone says that the value of any vehicle depreciates the moment you drive if off the dealership floor. This applies to both new and pre-owned vehicles; and while this is true in part, there are ways to protect and help maintain the value of your vehicle for future resale.
However, before we unpack some of the key factors that could affect the resale value of the vehicle, it is important to understand common terminology used by the motor industry when selling your vehicle.
Retail price: This is the recommended selling price, excluding any optional extras. Dealerships incur costs such as marketing, insurance, vehicle reconditioning and repairs, facility overheads and staff remuneration. As such, the dealership needs to factor some profit into the vehicle price, so the retail value is normally at the higher end of the scale.
Trade or market price: This is usually lower than the retail value, but may vary in line with vehicle demand. The trade or market price is the value which should be considered when trading in or selling your vehicle.
Depreciation: This refers to the reduction in the value of a vehicle over time, due to varying factors such as mileage, wear and tear damage etc.
If the vehicle also requires ongoing maintenance, it may be worth far less than you expected when the time comes to sell it.
Kutlwano Mogatusi, WesBank’s Communication Specialist
Photo Cred: Erick Mclean on Unsplash
The optimal time to trade in your vehicle
Used vehicle websites can be extremely valuable for researching which vehicles are the most popular, the fastest selling and have held their resale value over time. The optimal time to trade in one’s vehicle is when the trade value of the vehicle is more or less in line with the settlement amount owed to the bank.
“Variables such as mileage and the overall condition of the vehicle will also affect the resale value. It can be tempting to consider a bargain deal on a particular vehicle because it has a high mileage, but this could prove to be costly down the line. If the vehicle also requires ongoing maintenance, it may be worth far less than you expected when the time comes to sell it,” explains Kutlwano Mogatusi, WesBank’s Communication Specialist.
Photo Cred: Liam Briese on unsplash
Another useful tip is to resist over-embellishing your car with aftermarket accessories
Kutlwano Mogatusi, WesBank’s Communication Specialist
Simple tips to get the best resale value for your car
To ensure that you get the best price for your car, here are a few simple ways to maintain your car’s resale value:
When buying your vehicle, choose the make and model carefully. This includes the colour with white or silver being considered your best bet. Also consider that some brands are expensive to maintain or require more after-sales support than others.
Keep a detailed service record. Be diligent, stick to the maintenance schedule and keep a record of all work that has been done on your vehicle. A clean maintenance record will benefit you when it comes to negotiating the resell price of your vehicle.
Use it, don’t abuse it. This is self-explanatory and refers to all aspects of the car, from the brakes and transmission to paint chips, dented rims or a few dents – all these elements will be checked by a potential buyer.
Keep your vehicle’s papers in order. These include the original vehicle registration form and proof of payment of the annual vehicle licence fee; you should also ensure there are no outstanding fines or e-Toll costs owing on the vehicle.
Deal with the small issues:If you notice something wrong with your vehicle – anything from an unusual sound in the engine to a few scratches – have it dealt with it immediately. Not only will this help preserve it’s resale value, but it is always better to be safe than sorry.
Use a reliable mechanic. It is recommended that you service and maintain your car at a workshop with a good track record and trusted mechanics; remember that franchise dealerships have expert vehicle knowledge and qualified technicians who are specially trained to work on your specific brand.
Where you park your car can also impact its resale value. A closed garage is ideal, but this may not always be possible. Try not to leave your car parked under a tree or exposed in the sun for long periods at a time to maintain the exterior paint; also consider using a sun visor and even car seat covers to preserve the car’s interior.
Photo Cred: Chad Kirchoff
“Another useful tip is to resist over-embellishing your car with aftermarket accessories. While part of the joy of owning a car is making it your own, these personal style additions could impact negatively on its resale value. You might think oversized rims, outrageous body paint or a booming sound system are improvements but be aware that the next owner or the dealership where you plan to trade in your car, may not!” cautioned Mogatusi.
“Keeping your car clean and in as excellent condition as possible is probably the best way of ensuring it retains its value over time. A small scratch or dent might not seem like a big deal but accumulating dents or scratches over time will detract from the car’s overall appeal,” says Mogatusi.
If you are familiar with the saying – look after the cents, the rands will look after themselves – then you know that if you take care not to waste small amounts of money, it will accumulate capital and grow in value.
We probably don’t need reminding of this truth but, after almost 18 months of COVID-19 inflicted lockdowns at varying levels of severity, saving is proving to be particularly difficult for many of us at this time.
A shrinking economy, company closures, job losses and retrenchments are a harsh reality in South Africa today so, while we know the importance of saving, we also need to acknowledge the current circumstances in which many people find themselves.
Photo by Michael Longmire on Unsplash
“July is recognized as National Savings Month in South Africa. While encouraging everyone to save regularly, it presents a good opportunity to interrogate personal savings goals in line with the household budget.
This task needs to be done honestly and realistically, while taking into account the monthly income and expenses, what unexpected costs could arise, and the medium- to long-term financial plans,” says Kutlwano Mogatusi, Communication Specialist at WesBank.
Whether you can save a bit each month, put some funds into an investment account, or need to pay off your debts will depend on your situation. It helps to look at a comparison of all three scenarios to determine how best you should distribute your income, remembering the importance of building an emergency fund and talking about your debt to better your finances. Only then should you start building your wealth through investments.
If you have loans, the sooner you can pay them off, the better.
– Kutlwano Mogatusi, Communication Specialist at WesBank
The current reality for some is that repaying high-interest unsecured debt such as personal loans is now a permanent line item on the monthly budget plan. Despite the current low interest rates, servicing debt is regarded as expensive money due to the high-interest rates charged against the loan. Prioritize your debts if you have any and aim to pay off the highest debt amounts first.
“If you have loans, the sooner you can pay them off, the better. This will also free up some money that you could then invest, enabling your money to earn interest and grow,” says Mogatusi.
Once debts have been settled, it is advisable to speak to a financial adviser before embarking on your saving and investing journey.
This will help to inform your choice of savings plan that fits within your budget and is best suited to achieve your various financial goals.
While most South Africans may want to save to further their education or for their retirement, to start a new business, or to build or buy a home, an over-stretched budget makes this a difficult task.
For those who have been in a position to make regular monthly savings, the financial burden resulting from the pandemic would have been less severe, demonstrating why saving a bit every month is so important, given the already difficult climate.
While it is best to keep your savings funds invested, it is also a comfort knowing there are funds available for an emergency expense, or to put towards education, a retirement fund, or a personal goal.
For many people, car insurance is a grudge purchase because it isn’t something many people are excited to pay; yet without it, you could find yourself in long-term financial difficulties if your car isn’t covered by insurance.
If you are thinking of cutting back on your monthly expenses by saving on car insurance payments, you might end up thinking again if something were to happen to your car – and, even more so if the incident is your fault. As a first-time car owner, paying for insurance should be a must-have line item within your monthly budget.
Car insurance is a way of protecting your car – and yourself – against the harm and the costs if your vehicle is involved in an unfortunate incident such as an accident or gets stolen. By paying a monthly insurance premium and your personal return on investment is the peace of mind that comes with knowing that your vehicle will be covered by your insurer.
Knowing why you need car insurance is one thing but, making sure you choose the policy that will best safeguard your vehicle, is another– Kutlwano Mogatusi, WesBank Motor communication specialist
If your vehicle is insured with a reputable insurer catering for your needs, you will be covered for a vehicle accident, a natural disaster, fire or theft. In the unlucky incident that the accident is your fault and damage is caused to another vehicle, the driver or passengers, or even a pedestrian, your insurance should cover you for that too.
So, why do you need car insurance?
Well, if life were predictable, and we could see into the future through a crystal ball, we might think of insurance as an unnecessary cost. However, because it isn’t, and we can’t, having car insurance is like a safety net if something goes wrong.
Also, if you are trying to settle an insurance claim with a third party who has damaged your vehicle, you can call on your insurance company to resolve the matter. It takes the stress out of the process, and you don’t need to get involved in the admin related matters. You also have the peace of mind that it will keep your car safe in the case of an unforeseen curved ball that life might throw your way.
“Knowing why you need car insurance is one thing but, making sure you choose the policy that will best safeguard your vehicle, is another. The right policy ensures that your vehicle is safe from natural disasters, the threat of theft, fire, third party cover, damage or even a write-off resulting from an accident. This is comprehensive insurance cover, and it is usually mandatory if you have a vehicle finance agreement with a financial institution such as WesBank,” explains Kutlwano Mogatusi, WesBank Motor communication specialist.
A luxury car will attract a higher insurance premium, while an older vehicle or a second-hand car with a lower market value will cost less to insure
– KUTLWANO MOGATUSI, WESBANK MOTOR COMMUNICATION SPECIALIST
Knowing how insurance works will serve you well
The best car insurance policies include vehicle repairs and replacements, reimbursement for damages to the other party or parties from an accident you cause, car hire while your car is being repaired, and even roadside assistance. When you report a claim to your insurance company, a representative should be available to manage the claims process and assist you with any questions you may have.
Shopping around for a policy that suits both your needs and your pocket is advisable. Be sure to read, and understand, the terms and conditions within the fine print too – you don’t want any nasty surprises if you need to make a claim.
“Knowing what factors can affect the amount you pay on your monthly premium will also help you make a more informed decision on what insurance policy to use.
This starts with the type of vehicle you drive – a luxury car will attract a higher insurance premium, while an older vehicle or a second-hand car with a lower market value will cost less to insure. Even the colour of the vehicle can impact the insurance cost, with white and lighter-coloured cars attracting a lower premium,” explains Mogatusi.
With so many car insurance deals on the market, you can shop around for the best rates.
– KUTLWANO MOGATUSI, WESBANK MOTOR COMMUNICATION SPECIALIST
Factor which affect your premiums
Living in South Africa, the risk of vehicle theft is a real issue too, and some makes of cars are more of a target for thieves and crime syndicates. Again, this can influence your insurance policy premium because the insurer will take into account the increased risk in insuring your vehicle.
Premiums can also be affected by other factors such as your age, where you live and work, and the length of time you have been a licensed driver. How you manage your personal finances and your credit history will also be considered as the insurance provider needs to ascertain your risk profile when determining your premiums.
As a young professional, if you have been driving for less than five years, you are considered an inexperienced driver to the insurance company. No matter how competent a driver you may be, the insurer considers an inexperienced driver to pose a greater risk if you are involved in an accident. Again, this will affect your premiums, as will the noting of who the regular driver of the vehicle is. It is important to ensure these details are listed correctly.
Always look for the best deal to suit your pocket; we will always recommend comprehensive insurance as first prize.
– KUTLWANO MOGATUSI, WESBANK MOTOR COMMUNICATION SPECIALIST
A high safety rating and increased safety measures in the car can attract a lower insurance premium. This is because the vehicle has less chance of being broken into and features such as airbags, ABS brakes, a seat-belt warning system and rear-view camera could assist in lessening the damage in the case of an accident.
While the monthly premiums for insurance may seem like a grudge payment, it is important to consider this in alternative light.
If you are involved in an incident and have no insurance cover, you will have to pay for the damages to your car and the other vehicle, if it is your fault, from your own pocket.
“With so many car insurance deals on the market, you can shop around for the best rates. Consider the extra benefits on offer too, such as roadside assistance, discounts for good driving or lowering your premiums annually as your vehicle depreciates in value.
Look for the best deal to suit your pocket. We will always recommend comprehensive insurance as first prize. If this is not affordable in your current circumstances, make sure that at the very minimum you then have the basics of fire, theft and third-party covered,” says Mogatusi.
Much has been written about the topic of balloon payments. Should a balloon payment be considered as an option when finalising the instalment deal on a new car, or is it something to avoid and steer well clear of?
Factoring a balloon payment into the finance agreement of your next car purchase may come with some appealing benefits, but make sure you fully understand these, and that you use these benefits wisely. Responsible budgeting is key with such payments and you’ll need to act sensibly during the repayment period to maximise what it offers.
Balloon payment deals require discipline
– Kutlwano Mogatusi, WesBank Communication Specialist
What is a Balloon Payment?
A balloon payment allows a buyer to take an amount owing on the purchase price of a car and set it aside, meaning the monthly instalment amounts are calculated on a lower value – in turn making repayments more affordable.
To put it simply, with a balloon payment, you’re essentially paying off a loan for most of the car, but not all of it. The amount set aside at the onset remains the buyer’s responsibility and will need to be settled in the long run.
Being responsible with your money and keeping within your budget are key to managing a balloon payment option.
– KUTLWANO MOGATUSI, WESBANK COMMUNICATION SPECIALIST
“Being responsible with your money and keeping within your budget are key to managing a balloon payment option. It should not be used as an end to a means to buy a car that you can’t afford to maintain,” says Kutlwano Mogatusi, WesBank Communication Specialist. “Balloon payment deals require discipline. If a buyer is not financially savvy enough to manage cash flow and continue to save during the finance term, then a balloon deal is probably not the best option for that person.”
It is important not to view a balloon deal as a means to purchase a car you simply cannot afford
– KUTLWANO MOGATUSI, WESBANK COMMUNICATION SPECIALIST
Vehicle owners considering a balloon payment deal should familiarise themselves with the term ‘breakeven point’. The breakeven point occurs when the financed car’s trade-in value matches the amount still owed to the bank.
When calculating the breakeven point, it’s important to include the amount outstanding in the balloon debt at the end of the loan period.
What you should know when considering a balloon payment
It is important not to view a balloon payment as an alternative to an upfront deposit. A healthy deposit on a new or used car will always reap returns further down the financial road. Not only will it bring your breakeven point forward, but it will also lower the monthly repayment costs and the deferred debt held in the balloon. You also won’t be liable for additional debt at the end of the finance period.
As an example, if a vehicle purchase price is R300,000 and a buyer defers 10% of this into a balloon payment, then the monthly repayment amount will be calculated on a price of R270,000. The deferred balloon sum of R30,000 will need to be settled at the end of the contract term.
This example illustrates how a balloon payment deal is similar to putting down a 10% deposit on the vehicle. However, the difference is that the buyer needs to save the R30,000 while paying off the loan to reimburse the bank at the end of the finance term.
“While the benefits that come with keeping monthly costs down may be extremely appetising, it is important not to view a balloon deal as a means to purchase a car you simply cannot afford. A looming lump sum payment, after years of driving a vehicle, is easy to ignore and forget. But settling that debt ultimately remains the responsibility of the buyer,”says Mogatusi.
It’s all very well to find a car that you both like and can afford, but you also need to understand all the financial jargon that comes with making the purchase.
There is no shame in admitting you don’t know about the warranty, total cost of ownership or service plan. While all these terms can be intimidating the first-time round, asking questions will ensure you become vehicle finance savvy.
Here’s the second installment of our 2-part guide to understanding vehicle finance jargon which will help you make the right choices:
“There isn’t a one-size-fits-all solution to structuring a car finance deal. By being totally honest with yourself and knowing how much you can realistically afford on the vehicle repayment, you are on the best-informed path to owning a car. As a responsible lender, WesBank will only provide credit for an amount that you can afford to pay back.”
– Kutlwano Mogatusi, WesBank Motor’s Communication Specialist
Total cost of ownership: As mentioned, there’s more to owning a car than paying the monthly instalment. You need to budget for the running costs too – fuel, insurance, licence, servicing, maintenance, tyres and brakes, tolls, maybe the odd speeding fine! It’s important to buy a car you can afford even if it’s not yet the car of your dreams.
Insurance: There are plenty of tempting insurance offers to choose from, however, WesBank recommends comprehensive insurance cover for a first-time car owner. This will cover you in the unfortunate event of accident damage, theft or vehicle write-off, plus you are covered for third party damage, which is damage to another vehicle in the case of an accident. The high risk of driving an uninsured vehicle is just not worth it.
Warranty: A new car usually comes with a manufacturer’s warranty that would cover a faulty fuel gauge for example, but not general wear and tear on the brakes. It lasts for a certain time period but the finance provider, such as WesBank, can extend the warranty period, and can also offer you a warranty when buying a used car.
Service plan: Usually covering the cost of a standard service, a service plan pays for your car’s regular services at set intervals (period of time or kms driven) as stipulated by the manufacturer. Be sure to understand what repairs or parts are excluded from the plan to avoid a nasty bill following a service.
Maintenance plan: Maintenance plans differ in what they offer but most include the cost of servicing plus general vehicle wear and tear repairs to keep your car running efficiently. Again, make sure you are 100% clear on exactly what the plan covers and what is excluded.
“Now that you understand the jargon and consider yourself to be vehicle finance savvy, all that’s left is to check the vehicle finance agreement, including the small print, and sign on the dotted line – but, only once you’re satisfied with all the terms and conditions. Then, you are ready to safely take to the open road in your very own car,” says Mogatusi.
It’s all very well to find a car that you both like and can afford, but you also need to understand all the financial jargon that comes with making the purchase.
There is no shame in admitting you don’t know what a balloon payment is, or the difference between fixed and linked interest rates. While all these terms can be intimidating the first-time round, doing research will ensure you get the best financial deal on your set of wheels.
Before you get to the part where you drive off in your car, let’s get back to understanding the payment deal to make sure you sign up for the best financial plan that suits your needs and more importantly, your pocket.
“Car ownership is more than the initial price tag. A customer will need to consider monthly repayments, plus the added costs of fuel, comprehensive insurance cover and general maintenance and service expenses when buying a car.”
– Kutlwano Mogatusi, WesBank Motor’s Communication Specialist.
Here’s the first of our 2-part guide to understanding vehicle finance jargon which will help you make the right choices:
1. Interest rate: The interest rate affects the amount a bank charges you for borrowing money and the amount you need to pay back is determined by the interest rate on your finance agreement. The current low interest rate is good news for anyone repaying a vehicle finance loan.
2. Fixed or linked interest rate: You can choose between a fixed or linked (variable) interest rate on your vehicle finance agreement. As it says, a fixed interest rate remains the same, as does your monthly instalment. A linked rate fluctuates with the prime interest rate set by the South African Reserve Bank – if the rate increases, so will your payment but if the rate goes down, you will benefit from a lower monthly payment.
3. Deposit: This is a cash amount you pay upfront before the vehicle finance agreement starts. This amount is deducted from the price tag, so it makes sense that the bigger the deposit you can pay, the less you will owe on the car in the long run.
4. Finance period: The finance period is the length of time you agree to in the contract to pay off the car. It affects your monthly instalment and interest amount. A longer period may mean a lower instalment but the interest adds up so you could end up paying more. A shorter payment period might incur a slightly higher monthly payment but lessens the interest paid out in the long term, which is a good thing.
5. Balloon payment: A balloon payment is a lump sum amount that still needs to be paid at the end of the vehicle finance contract. So, on the upside, while it reduces your monthly instalment for the contract period, you will need to settle it in full at the end, so be cautious of this payment option. Because you may end up paying more interest in total in the long term, you need to make sure you have budgeted and saved enough to pay off the outstanding balloon payment. This amount however can now be refinanced, which will extend your term to pay back the car loan.
“Now that you understand the jargon and consider yourself to be vehicle finance savvy, all that’s left is to check the vehicle finance agreement, including the small print, and sign on the dotted line – but, only once you’re satisfied with all the terms and conditions. Then, you are ready to safely take to the open road in your very own car,” says Mogatusi.
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