Get the best price for your car
As vehicle finance loan defaults increase, one option is to downgrade your car to a more affordable one
As consumers are increasingly squeezed on all sides by rising inflation, increasing interest rates, high fuel and food costs, the latest Eighty20/XDS Credit Stress Report (Q4 2022) shows an alarming trend: an increasing appetite for credit, with more than 800,000 South Africans entering the credit market for the first time in the fourth quarter of last year.
Even more disturbing, the report reflects a surge in the number of credit card, vehicle asset finance and home loans that are newly in default.
Those new to the world of debt took out a whopping R9.3-billion in new loan value, the highest in more than two years. The total credit-active population now stands at 18.7 million, with total loan balances at an astounding R2.3-trillion.
“These statistics show that South Africans are increasingly turning to credit to survive the relentless onslaught of cost-of-living increases,” says chief executive of Debt Rescue Neil Roets.
Andrew Fulton, director at Eighty20, says the credit stress in the middle class appears to be even more pronounced for “heavy hitters” – SA’s wealthiest 5% of the population. Home loans have created significant pain for consumers in this segment, with a 25% yearon-year increase in average mortgage instalments, due largely to rising interest rates.
By February, the prime lending rate was 10.75%, which increased monthly instalments on a R1.5-million loan taken out in 2021 by R3,400 in little over a year. The Reserve Bank raised rates by another 50 basis points this week, taking the prime lending rate to 11.25%.
The report shows that the rate of default on car loans increased by 30% among the middle class (average income of R15,000 a month) in the fourth quarter of 2022. The “heavy hitters” did not fare any better, with a 30% increase in their rate of default on car finance as well.
If you are struggling to manage your car repayments, it might be time to downgrade to a more affordable car.
Weelee chief executive Marc Friedman says there are 10 ways to make sure you get the best price for your wheels:
First, determine your car’s current market value. This is the value that the same vehicle as yours would typically sell for. It fluctuates quite a bit, depending on which channel you use to sell your vehicle, as well as other variables such as your car’s condition, mileage and service history. You can get a car value report from TransUnion for just R10.
Selling your second-hand car privately might generate the most cash. However, you are exposed to more risk from unknown parties coming to view your car. A trade-in at a dealership might be a simpler way to sell your car, but you are likely to get less for it. Trusted online platforms that get you a number of offers for your car are becoming increasingly popular.
1. Value:
2.
Compare channels:
3. Service history and paperwork:
A full service history can make a massive difference in the price you get. Ideally, your car would have been serviced regularly at an approved service centre and the service book stamped. Also make sure that all paperwork is available and that licence discs are up to date.
When advertising, spend time on a
4.
Detail-driven:
5. Quality pics:
6. Tidy up:
7. To fix or not to fix:
8. Honesty is key:
Be honest upfront about any issues and imperfections.
Make sure you are reachable through the contact details provided – missing one call or email might mean losing out on your best offer.
Know the following terms so you get the most money out of the deal:
Retail price: This is the price of the car when someone buys it from a dealer. Selling price: This is the trade-in price plus the dealer’s profit/markup. If you sell privately, you will get the retail price. Trade-in price: This is the price that the dealer will pay you for the car. This will go towards settling your vehicle finance or you’ll receive it as cash towards another car. Book value/“blue book value”: Dealers may talk about the blue book value – this is the industry-accepted dealer valuation book by TransUnion on which they will base their price.
9. In contact:
10
detailed description specifying the car’s make, model and mileage, plus any other specifications.
Take good-quality photos, from all angles, to showcase your car. It’s smart to include pictures of the engine bay and interior as well.
Wash your car and/or take it for a valet before taking the photos.
Fixing little dents, scrapes or minor mechanical issues could get you a higher price, especially when selling privately. However, this is sometimes unnecessary when selling to a dealer, since they can often perform minor fixes at a lower cost and won’t necessarily pay you more if the fixes have already been done.