Investing in a used car is not always as simple as buying new. There are many ‘shady sellers’ out there who promise the world but fail to deliver. Sometimes the selling price can impress on paper, but when you factor in all the additional costs, it becomes less of a plausible financial scenario. It’s vital to crunch all the numbers involved in selling your current vehicle and buying a second-hand car before you receive the keys and drive off in your ‘new’ wheels.
Here is your go-to checklist for calculating the costs when buying a second-hand car:
#1 Know your price
Being aware of your budget constraints will help you better curate the list of cars that you might want to consider.
If your budget is lower than what most used cars are currently selling for, consider a range of models with more kilometres on the clock.
Remember to also factor in additional once-off expenses such as registration, licensing etc.
#2 Add up the costs
The price on the website might say R150 000, but in reality there are a number of other figures that should form part of your calculations when buying a used car:
Once-off costs: Extra transactional costs include ‘delivery fee’ or ‘road charges’ which take into account fees for car registration, issuing of a new number plate, pre-delivery inspection and refuelling. Rather opt to pay cash for these instead of including it in your financing plan, which could increase the interest rate.
Insurance: Make sure you get at least 3 insurance quotes to find the best deal before you drive the car out of the dealership.
Fuel consumption: Do some due diligence on the fuel consumption of the car you soon hope to call your own. You might already be struggling to balance the books with various monthly expenses involved in paying off the car and don’t need to spend even more on fuel. (There are some great fuel efficient cars out there – so it is worth doing your homework on this).
Service plan: Does the used car already have a service plan or can the dealership sell you one?
Warranty: Find out if you can purchase or extend the warranty on the car to cover any major mechanical failures and give you peace of mind.
Tyres: Make sure that the tyre tread is at least 3 mm and without any leaks. Tyres don’t come cheap and you don’t want the additional financial outlay of replacing tyres within a few months of purchase.
Replacement parts: Are replacement parts readily available in your vicinity or do you need to order them from overseas? How affordable are the parts?
#3 Have the car inspected by a mechanic
While this exercise will cost you money in the short term, it will be worth it in the long run when buying a second-hand car.
Make sure to take the vehicle to a mechanic who knows this model of car. For example, only certain mechanics deal with electric or hybrid vehicles.
#4 Negotiate a good deal
Prices on used vehicles are almost always negotiable and there is usually some wiggle room involved in buying a used car.
Make an offer that is 15-25% lower than the asking price and ascertain whether that is viable.
If you are buying from a dealership, the price may not be movable, but you can always negotiate to include additional benefits like a service plan or warranty plan.
#5 Sell your old car for the best price
There are a myriad of options available when it comes to selling your current vehicle, but you must select the one that will give you the best price, so that you can buy an even better ‘new’ car.
Your options are as follows:
- Trade-in your car – this is unlikely to secure you a good price as dealerships want to resell the vehicle at a decent profit, meaning you get the raw end of the deal.
- Sell your car privately – you will only receive one offer, stacks of paperwork and the risk of engaging with dodgy buyers.
- Sell your car through a reputable online platform. And make sure it offers a secure and stress-free online process, excellent service and of course, the best price.
After doing a little due diligence and the calculations, go forth and negotiate a good deal when buying the second-hand car of your dreams!