Thoughtless buying of a vehicle may cost you dearly!

24 April 2006 Arnold van der Linde

Thousands of South Africans are trapped by the thoughtless and "misleading" acquisition of a vehicle. More often than not, this results in the monthly instalment not being maintained and the vehicle being repossessed by the finance company.

"The price of a vehicle, unplanned extras and insurance not taken into account can be a nasty surprise and cause dire financial difficulties," says the managing director of IntegriSure, Arnold van der Linde.

NAAMSA predicts that 2006 will be a record year for the South African motor industry and vehicle manufacturers are confident that new passenger vehicle sales may exceed 600 000 units. "A vehicle is an expensive asset and you have to think and plan carefully before you decide to buy," Van der Linde says.

He says potential buyers are too easily influenced by cunning salesmen who manipulate their emotions when they set sight on a new vehicle. "Do your homework beforehand and make sure exactly what you can afford, all inclusive," is his advice.

One is easily stupefied by the irresistible smell, shining colour and fascinating extras of a new vehicle on the showroom floor. And before you know it, you cough up R20 000 more than you can afford. And then right at the end, to add insult to injury, it is almost casually offered to arrange both the financing and insurance of your new showpiece.

"By this time you are so overwhelmed by the pleasure of your new vehicle that you just want to get the paperwork over and done with. And that is exactly where you make a major financial blunder for which you will be paying for many years," says Van der Linde.

Many people don't seem to realise that in most instances you can obtain a much more favourable interest rate from your own bank, where you have a sound financial history.

"By the same token, buyers are often led to believe that they are obliged to take out insurance for the vehicle from the finance company (their own bank or via the dealer). This is absolutely untrue," says Van der Linde. "Nobody may force you to take out insurance from any specific company. You should in any event be able to negotiate a better premium with your own insurer because it forms part of a portfolio."

Because vehicles are expensive and you don't buy one every day, it makes good sense to obtain more than one quote. Over a five-year term a lower instalment can save you thousands of rands in the long run.

Van der Linde points out that vehicle sales have increased dramatically and that the growing market often consists of inexperienced people who do not yet have sufficient financial wisdom at their disposal. He is concerned that those people can easily be misled and exploited.

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