‘Good deals on ve­hi­cle trade-ins in the next six months’

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE - NEESA MOOD­LEY-ISAACS

The next six months could be a good time to trade in your car for a new model, be­cause dealers are ex­pected to make at­trac­tive of­fers to bring in more buy­ers.

How­ever, the po­ten­tial to re­ceive a higher price is not in it­self a good rea­son to trade in your car. You should aim to pay off your cur­rent car as soon as pos­si­ble and then save to­wards a de­posit on a new car. The big­ger the de­posit, the smaller your re­pay­ments and in­ter­est costs.

Marcel de Klerk, Absa Ve­hi­cle and As­set Fi­nance’s manag­ing ex­ec­u­tive, says there is big de­mand for used cars, and prices are ex­pected to start ris­ing. This means you are likely to re­ceive a higher trade-in value than pre­vi­ously if your car is one to three years old.

Ac­cord­ing to the Na­tional As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers of South Africa, the sale of new passenger ve­hi­cles was 3.48 per­cent higher in July than in June.

De Klerk says the rise is prob­a­bly due to more work­ing days in July in which to sell cars. “There are also more fleet sales be­tween July and Novem­ber,” he says.

De Klerk says the fact that an av­er­age of 960 cars were sold each work­ing day dur­ing June and July is a good sign, and he doubts the mar­ket will get worse.

How­ever, De Klerk cau­tions that the mar­ket is ex­pected to show a real re­cov­ery only from about March next year.

Sales in Jan­uary and Fe­bru­ary are usu­ally not high, be­cause of school hol­i­days and the fact that most peo­ple are cash­strapped af­ter the hol­i­days.

Bank data show that own­ers of new cars are hold­ing on to their ve­hi­cles for an av­er­age of 39 months (an in­crease of more than 10 per­cent from last year). This means that al­though in­ter­est rates have dropped, peo­ple are still not chang­ing their cars as quickly as be­fore.

De Klerk says one of the rea­sons for this is that af­ter the Na­tional Credit Act was in­tro­duced in June 2007, it be­came le­gal for car hire pur­chase deals to pri­vate con­sumers to ex­ceed a term of 54 months.

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