First-time car buyer? Learn how to budget, finance, choose, and purchase your first car with our easy guide—practical tips to make a smart car-buying decision.
Buying your first car? Nice! We’d like to help. As much as we’d like to say that it’s just about picking your favourite make, model and colour, it requires a bit more planning, and understanding of your finances as well as the buying process. Here’s our easy guide to help you turn the dream of owning your first car into a reality! Good luck!
Step 1: Figure out what you can afford
You can’t really even look at a car without knowing how much you can afford. This isn’t just about the sticker price on the windscreen — you’ll need to think about ongoing costs like fuel, insurance, maintenance, and registration fees.
To figure out your budget, start by looking at your finances:
How much do you earn a month
Add up your monthly income sources, plus any side hustles you might have.
How much do you spend a month
Make a list of your fixed expenses (like rent, utilities, medical aid, etc.) and your variable expenses (like food, entertainment, etc.).
How much will it cost to own a car
Don't forget to include possible costs for insurance and regular maintenance. If you need help calculating these costs, we’ve got some handy tips for you right here.
See what’s left
What’s left after subtracting your expenses from your income can help you figure out what you can comfortably spend on car payments.
Step 2: Decide how you will pay for your new car
If you have the cash safely stashed away this is an easy one. However, if you don’t or if saving up to buy a car for cash isn't an option, you'll probably need a car loan. There are two main ways to finance your new ride:
Apply for a loan through direct lenders
Banks, credit unions, and financial institutions offer loans directly. Getting pre-approved by a lender can be a game-changer when negotiating the terms of a car deal, as you'll know the loan amount and the interest rate you qualify for upfront.
Or apply for one at a dealership
Dealerships often offer financing through partnerships with lenders. This is a convenient way of doing it but just be sure to compare these offers with direct lending options to make sure you’re getting the best deal.
Step 3: Decide whether you want a new or used car
What do new cars have going for them?
They come with the latest features, full warranties, and minimal wear and tear but depreciate rather quickly.
And used cars?
These can offer great value and lower initial costs but might need more maintenance. Also, always try to have a used car inspected by a trustworthy mechanic before you finalise the deal.
Step 4: Start your search
Now that you know your budget and whether you want a new or used car, it’s time to start shopping. Here are a few ways to find your first car:
- Visit dealerships: Go to local dealerships to see what’s available and take a few cars for a spin.
- Browse online: Check out online car-selling platforms. You can find a wide range of cars and compare prices easily.
- Explore private sales: Look through classified ads for private sales. Sometimes you can find great deals from individual sellers.
Step 5: Thoroughly check out your short-list
Test drive the car
This is a must-do. Take the car for a test drive in different conditions to see how it performs and if it feels right for you.
Check the car’s history
If you’re buying a used car, get a vehicle history report. Places like the South African Insurance Association (SAIA) have an online tool for people wanting to check the history of a car they want to buy. It will query a car’s vehicle identification number (VIN) against the insurance industry’s vehicle salvage database (VSB) telling you all kinds of useful things like, for example, whether it has ever been written off.
Step 6: Negotiate your deal
With your research on car prices and preapproved loan terms, you’re ready to negotiate. Whether at a dealership or with a private seller, don’t hesitate to haggle on the price and terms.
Double-check the financing terms if you're going through a dealership. Make sure there are no hidden fees or overly long loan terms that will cost you more in the long run.
Step 7: Finalise the purchase
Once you've agreed on a price, it's time to sign the papers. Review the contract carefully to make sure everything is as discussed, especially if you're financing through the dealership.
Make sure you insure your new ride
If you're financing your car, you'll need proof of insurance before you can drive off. Even if you're buying with cash, it's one of the biggest assets you'll own, so insuring it against anything bad is probably a good idea. Make sure to shop around for the best rates and coverage though. With Naked, you can get a quote right on the dealership floor in just 90 seconds. If you like it, you can then buy your insurance on the spot and email proof of your coverage from the app, so you're ready to drive off in your new wheels.
Register the car in your name
The dealership may handle this, but if you buy from a private seller, you’ll need to visit your local licensing department or post office to transfer the title and register the car in your name.
Some more handy tips for first-time car buyers
- Remember, cars lose value over time. Think about how long you plan to keep your car and how its depreciation will affect its future trade-in or resale value.
- Think about whether you should sell or trade in your car. If you already have a car, decide whether to sell it yourself or trade it in at the dealership. Selling it on your own might take more effort but could give you more money for your new car.
- Carefully check your loan terms to make sure they don’t leave you owing more on the car than it’s worth. This is a common issue with long-term loans, so be careful.
Buying your first car is a big deal and an exciting milestone. With a bit of preparation and the right knowledge, you can make a choice that's both fun and financially smart. The key is to find a car that fits your lifestyle and budget, not just now but for the long haul.
