Buying a car is an exciting process. However, it’s important to acquaint yourself with some important facts before signing your vehicle finance contract.
WesBank has some advice for car buyers who’re about to take the plunge, to help them ensure they make the right financial decisions and remain in the know.
1. Ask, ask and ask again
When you arrive at the dealership to finalise the deal, you’ll be guided through the process by the dealership’s appointed finance and insurance representative (F&I). The F&I will have a checklist of important points that you have to completely understand before signing your contract and taking delivery of your new car. If you don’t understand anything then you can ask for clarification and simpler explanations. Don’t rush the signing process. Rather make sure you understand everything, so that you aren’t surprised a month or two down the line.
2. Get familiar with finance
In the process of arranging your contract, you’ll be given the option to choose a fixed or linked interest rate. Know the difference, and how this will affect your budget in the short and long term. A fixed interest rate on your loan will be higher at first, but it will also remain the same for the duration of the loan. Conversely, a linked interest rate will be lower at first, and save you money. However, it also increases – and so will your monthly car installment – when the Reserve Bank changes interest rates.
3. Extras explained
The signing of the contract is when you’ll be given a breakdown of what you’re paying for. This will include the vehicle’s invoice price as well as any delivery, licensing and admin fees. You’ll also be given the option to include any value-added extras. These are products that will enhance the vehicle ownership experience, and they range from extended warranty and service plans, to minor insurance products that provide paint and dent protection, or wheel and tyre insurance.
There are also products that protect your finance. These include value-added insurance packages that will refund your deposit in the event of a major accident or theft, and a gap cover insurance that will settle the car loan with the bank should your comprehensive insurance not pay the entire amount.
4. Always be insured
One of the important documents you’ll have to take along when signing your contract is proof of comprehensive insurance. This only applies if you have an existing insurance policy and have opted to arrange your own insurance. If you have asked the dealership to arrange an insurance quote, they’ll have this document. This is vital because you’ll not be allowed to drive the car out of the showroom without proving to the bank that the vehicle is insured.