Buying a car is an exciting but daunting task, especially if you don’t know much about cars. For many people, a car is a status symbol so you want to purchase a car that looks the part, runs smoothly and is a good deal for your budget.
If you don’t do your homework well, it is easy to end up in a money pit. This is especially true of second-hand cars that may have hidden faults that will require you to spend more than you had anticipated on repairs and spare parts.
Whether you’re buying the car new or second-hand, here are some key factors to consider:
Your car budget
The first thing you need to do is determine how much you’re willing and able to spend on a car. Ensure the type of car you want fits your budget. While many people buy their first cars through loans, if you can afford it, it is better to buy a car with cash. This is because cars depreciate quickly in value and require more money to service and maintain. It doesn’t make sense to incur the extra expense of paying loan interest.
If you opt to take a car loan, nevertheless, shop around for a plan that is suitable for your monthly income. The general rule of thumb is that you should not spend more than 20 per cent of your monthly income on car payments. Remember, this number is a general guideline – you shouldn’t necessarily go that high if your financial situation doesn’t allow it. Ideally, your car loan payments should be below 10 per cent of your monthly income.
Before purchasing a car, consult an insurance agent. Car models and the age of a car might affect the amount you’ll have to spend on insurance premiums. It’s also advisable to compare prices before buying a car. Fortunately, if you don’t have time to walk to different car dealerships, you can do this by checking online car selling platforms.
New or second-hand?
Another factor to consider is whether you should invest in a new or a second-hand car. The answer to this depends on factors such as your budget and preferences. Generally, new cars are more expensive than used ones and attract higher duty taxes from the government. But if funds for the initial purchase aren’t an issue, a new car is a good investment.
If you can buy a well-maintained second-hand car, it might be an even better investment. Cars are a rapidly depreciating asset. A new car will lose approximately 20 per cent of its monetary value in the first year alone. After the first year, a new car will depreciate by approximately 10-15 per cent every year until it hits the five-year mark. This means that after owning a new car for five years, it will have lost around 60 per cent of its original value.
If you opt for a used car, especially if relatively new, the depreciation rate should be gentler. To calculate depreciation of a used car, consider factors such as mileage, age of the car, it’s general condition, the model and the number of owners it has had.
A bulk of car sales in Kenya is from lower-priced second-hand imports from countries such as Japan. Many Kenyans prefer imported or locally-used second-hand cars since they are cheaper and attract less taxes from the government.
Before buying a used car, bear in mind that the lifespan of a car is 10 -15 years by international standards. In Kenya, the lifespan can go up to 20 or 25 years.
Many second-hand cars imported into the country have already been on the road for about eight years. In a few years, it is likely that you will spend a significant amount of money on repairs and spare parts.
In comparison, new car may require servicing every four months. It may not need any spare parts for the first three years. If you buy a new car from an authorised dealer, you also get a car that is tropicalised from the factory for local road conditions.
Availability of spare parts
Although the conditions of Kenyan roads have improved over the years, they’re nothing compared to roads in developed countries. Many urban roads are replete with potholes, while almost all rural roads are unpaved and bumpy. Such conditions mean your car will deteriorate faster, increasing the need for spare parts and repairs.
With this in mind, it is advisable to go for models that have spare parts readily available in local shops and garages.
Your needs
What is the main reason you need the car? Is it a leisure vehicle, for daily commute or for leasing out?
How you intend to use the car is an important factor to consider before purchase. For instance, if you need the car for daily use, you need to go for a car that is fuel economical. Going for hybrid vehicles or those with lower engine capacity usually means better fuel economy.
Also look at features such as sitting space (especially if you have a family), off-road capability if you’ll be travelling upcountry, and fuel tank capacity to ensure that you can travel long distances without needing to refuel.
Before settling on a car to purchase, take a look at different expert reviews. They will give you an insight into factors such as price range, model, key specifications, driving experience, safety rating, resale value and much more.
If possible, go for a long test drive (at least 30 minutes) and have the car assessed by a trusted mechanic before finalising the purchase.
SOURCE: https://www.standardmedia.co.ke/the-standard-insider/article/2001392182/what-to-keep-in-mind-when-buying-a-car
