The Five Most Common New-Car Buying Mistakes in South Africa

Nobody sets out to overpay for a car. Yet the same handful of mistakes turn up in almost every regretful new-car story we hear, and none of them involve being tricked. They are ordinary decisions made quickly, usually because the monthly figure looked right and the salesperson was friendly. The good news is that each one is easy to avoid once you know what it looks like.

These are the five we see most often, in the order they tend to happen.

1. Shopping by monthly instalment alone

The instalment is the number you live with, so it is natural to focus on it. The trouble is that almost any car can be made to fit a monthly budget. Extend the term, add a balloon payment, reduce the deposit, and the instalment falls while the total you repay rises. Two offers with the same monthly figure can differ by tens of thousands of rand over the agreement.

The fix is to ask for the total amount repayable and the term alongside the instalment, every time. If one offer costs more in total, you need a good reason to choose it.

2. Stretching the term to make the numbers work

Long finance terms are now common in South Africa because they lower the instalment. They also mean you pay interest for longer and build equity in the car more slowly. If you plan to trade in after three or four years, a very long term can leave you owing more than the car is worth, so the shortfall gets rolled into the next deal.

Choose the shortest term you can comfortably afford, and if a car only fits your budget on the longest possible term, it may be the wrong car.

3. Accepting a balloon payment without a plan

A balloon, or residual, is a lump sum deferred to the end of the agreement. It reduces the instalment but it does not go away. At the end of the term you must pay it, refinance it or trade the car in to cover it. Buyers who forget it is there face an unwelcome surprise several years later.

A balloon can be sensible if you know you will trade in before it falls due and the car is likely to be worth more than the balloon at that point. Otherwise, keep it small or avoid it.

4. Skipping the test drive because the spec sheet looked right

Reviews and specifications tell you a great deal, but they cannot tell you whether the seat suits your back, whether the ride is harsh on the roads you use, or whether the infotainment connects to your phone without a fight. Variants of the same model can also drive quite differently depending on engine, gearbox and wheel size.

Drive the exact variant you intend to buy, for at least twenty minutes, on a mix of roads. Bring the child seat if you have one.

5. Forgetting the costs that are not on the invoice

Insurance, fuel, tyres, services outside the plan, licensing and depreciation all sit outside the purchase price and can add up to more than the instalment over the years you own the car. A cheaper car with expensive insurance and thirsty engine can cost more per month than a slightly pricier car that is economical and cheap to cover.

Get an insurance quote and check the claimed fuel consumption before you commit, and use a total-cost view rather than the price tag when comparing your shortlist.

• Ask for the total amount repayable, not just the instalment.
• Pick the shortest term you can comfortably afford.
• Know exactly how you will settle any balloon payment.
• Test drive the exact variant on the roads you use daily.
• Price insurance, fuel and servicing before you sign.

Where Car4Less fits

Several of these traps are easier to avoid when the pricing is transparent to begin with. Every one of the 1 318 new cars in the Car4Less showroom is listed below the manufacturer's retail price, with variant pricing in the open, and the finance calculator lets you see how term, deposit and balloon change the total before you talk to anyone. You still sign with the bank directly on its standard terms, so nothing about the finance is hidden.

• Browse new cars below retail →
• Run the numbers on the finance calculator →