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Tuesday, March 31, 2020

The sensible Pinoy – Getting the best value when buying a car

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Roxanne Sarthou
Roxanne Sarthou
Roxanne Sarthou graduated from the University of the Philippines, Diliman. She is an Australian-qualified Financial Planner, Private Banker, Lending Manager and Property Investor. The information provided in this article is that of the author. Readers may get in touch with her via email on sarthou@honourbrothers.com.

Next to buying real estate, buying a car probably represents the second-largest major expense for any family. It is not uncommon for a family in Australia to own several cars — one for each family member old enough to drive. Here, we’ll look at some important things to consider when buying motor vehicles, and sensible ways to save money in the process.

Buying a New Motor Vehicle?

  • Unlike real estate property, cars can lose up to 20% of their initial value just as soon as they leave the showroom. You’ve got it right — that could be $20,000 out the window when buying a $100,000 car.
  • When visiting new car showrooms, always ask dealers about “demonstrator” models. These are essentially brand-new vehicles used exclusively by car dealerships for test drives. Their kilometre readings are generally low (under 10,000 kilometres) and car dealers are usually happy to sell them to you at a significant discount
  • Keep an eye out for “orphaned” car models. A 2019 car model, for example, is likely to be offered for less once the 2020 models of the same vehicle arrive on the showroom floor
  • Unless you actually need them, forget about “special options” which can substantially increase the cost of a vehicle. Car dealerships make the bulk of their profits on these optional extras, and you could wind up being out of pocket for a whole lot more than you budgeted for

Buying a Pre-loved Vehicle?

  • Stick to automobiles with low odometer readings. It’s hard to go wrong when a vehicle has done 15,000 kilometres or less
  • Remember that owners of luxury vehicles usually pay better attention to regular servicing and maintenance of their vehicles
  • If you decide to buy on finance, the amortisation on preloved vehicles can be dramatically lower than on a brand-new automobile. The insurance premiums you pay are also likely to be more affordable
  • Do you really think it makes sense to buy a brand-new automobile for a new driver in the family? The odds that the new driver is going to scratch, dent, or even wreck the car are much higher. Anyone on P plate should drive a vehicle that will protect him/her from injury in the event of an accident. This usually means a bigger car or perhaps an SUV

Finally, you alone are the best judge of what the excess on your car insurance coverage should be. Remember that the higher the excess (the amount you need to fork out when you make a claim), the lower your monthly premium is going to be

At the end of the day, it helps to remember that a motor vehicle is just a tool and one that eventually wears out. While buying an expensive car may make you the envy of your friends, it is, at best, a rapidly depreciating item. Decide between getting a new car or going pre-loved, and endeavour to keep everything within your budget.  Drive safely and enjoy the ride!

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