As a Netcars shopper you will enjoy the following benefits:
At Netcars, we have partnered with industry leading insurers to offer you various value added products such as warranties, credit protection plans, top-up insurance and scratch and dent policies to assist you in the event of unforeseen circumstances. Our industry leading insurance partners will make it their mission to find you the most competitive premiums available in the market.
A car purchase should be a thoroughly researched and carefully thought-out endeavor, to help you with your research we have put together some useful tips to consider:
1. Type of Vehicle
While it’s nice to drive a large SUV, it might not be practical. When researching your desired vehicle purchase you need to consider the purpose of the car as well as the ongoing maintenance thereof.
2. What is it going to cost you?
Great, you have checked your finances and can afford the payment. Have you considered the additional expenses that go hand in hand with the finance amount?
- Comprehensive Insurance
- Tracking Device Fees
- Service and Maintenance Costs
- Monthly Fuel costs
3. New vs. Used Car
While most of us wish we owned a brand new car, we need to consider the pros and cons of both purchases.
While most new cars (not all do) now come with a standard service plan and the option to upgrade (at an extra cost) to a maintenance plan, similarly, used cars can also have a service or maintenance plan added to the finance (at an additional cost) and in both instances offer you peace-of-mind-driving. Other factors that need to be considered include:
- Depreciation value
- Cost of insurance
- Future resale value
- Manufacturer product support
4. Rate, Term, Residual Values and Deposit
Rate – Firstly the rate is dependent on your current credit profile and also the value and type of vehicle you are purchasing. If you select a linked rate, you will need to consider the payment escalations when the bank`s lending rate changes. If you choose a fixed rate you will have peace of mind that your repayments will remain the same for the finance term, one drawback with this option is that you will not be able to convert back to a linked rate.
Term - This is also dependent on the value and age of the vehicle you finance. The longer you choose to finance your vehicle the longer it will take you to reach a break-even point in your finance agreement where you can trade your car in and settle your finance agreement. Banks usually finance vehicles between 12-72 months.
Residual Value - A Residual Value or "Balloon Payment" is a lump sum owed to the bank at the end of a loan term after all regular monthly repayments have been made. This allows a borrower to repay only part of the principal of their loan over its term, reducing their monthly repayments in exchange for owing the bank a lump sum at the end of the loan term.
While having a residual value will reduce your monthly vehicle instalment it will also determine WHEN in the finance agreement the break-even point will be reached to trade your car in.
When the NCA was introduced in June 2007, demand for balloon payments nosedived as more buyers opted for longer contract periods to help reduce monthly repayments. Subsequently, demand for balloon payments has grown by 60%. Presently, one in every five finance deals consists of a balloon payment that equals roughly 17% of the finance total.
The amount of a Residual Value/Balloon Payment may be represented as an absolute Rand value or a percentage of the finance amount. Except for leases, having a Residual/Balloon Payment on a car loan is optional.
Deposit - Deciding to pay a deposit will help to reduce your monthly instalment on your vehicle, saving on interest and also have the ability to trade your car in sooner.
5. Value Added Products
You can choose from a number of value-added insurance products relating to the car itself that suit your needs.
For example service and maintenance plans, tyre and rim insurance and scratch and dent cover.
More specifically related to the finance you can also take credit shortfall, which offers you peace of mind should your comprehensive insurance not cover the full finance settlement as well as credit life protection which gives you a life cover policy specifically related to the finance of the vehicle.