Aug 11, 2023 Nedbank, #1000Connections, Private Clients
Nedbank offers young professionals 5 useful tips for buying their first car
For young professionals embarking on their journey towards financial success, buying a first car is a significant milestone. While the process may seem straightforward, it's essential to approach this major investment with preparation and caution.
To help young South Africans make the right choices, Nedbank’s Private Clients recently teamed up with BMW in Pinetown to host a networking event and webinar to offer invaluable advice on buying a first vehicle. The event aligned with the Private Clients #1000Connections philosophy, which underscores the importance of building the right connections and pathways to wealth. Private Clients aims to help the next generation of leading South African entrepreneurs and business champions nurture valuable connections, develop financial acuity, and build the foundations for their successful financial futures.
The discussion delivered the following 5 key insights for anyone wanting to buy their first car:
1. It starts with a good credit score - For most people, buying a car involves financing, which means a bank will have to do a thorough review of their credit history. Building a solid credit score long before you apply for finance is a sound first step, panellists agree. Fiona Brown, Head of Sales for MFC in KwaZulu-Natal, explained that this can be achieved simply by making regular payments on loans, credit cards, or store accounts to demonstrate your financial discipline. 'If you don't have a credit history, consider obtaining a store account or small credit line and repay it diligently,' she recommended, 'as a strong credit score will not only increase your chances of getting approved for finance, but also may lead to better interest rates.
2. Be realistic - Most young people dream of cruising around in a flashy luxury car, but practicality should take precedence when it comes to buying your first car. Caryn Buys, Corporate Sales Manager at BMW in Pinetown, recommends that, before you start shopping, you first do some honest budgeting and determine what you realistically can afford. 'Also take into account potential future expenses such as rising interest rates and insurance costs.' If affordability is a challenge, she suggests exploring second-hand vehicles, as they can be a wise and cost-effective option. 'Remember: this purchase marks the beginning of your lifelong vehicle ownership journey,' she explains, 'so start off on the right foot.'
3. Choose trusted partners - A vehicle is probably the biggest and most expensive moveable asset you’ll ever buy, so it’s not a transaction you should enter into lightly. It's crucial to work with reputable and ethical partners. Choose a dealership known for its reliability and customer-oriented practices. Partner with a trusted financial services provider who will explain all the intricacies of the agreement. A reliable relationship banker, like those at Private Clients, can guide you through the paperwork and make sure that your best interests are protected.
4. Understand the fine print - When buying a car, you are essentially entering a long-term contract involving three parties: you, the dealership and the finance institution. This means you'll encounter numerous pages of terms and conditions. Take the time to read and comprehend all the documents, including the offer to purchase from the dealership and the finance offer from the bank. If you're already a Private Clients accountholder, your dedicated relationship banker will help you understand the paperwork thoroughly.
5. Factor in all the costs - A common mistake made by first-time car buyers is to consider only the amount of the monthly instalment when calculating what they can afford. The panellists highlighted the need to look at all the additional expenses, which includes insurance (which is compulsory for financed cars), maintenance, fuel, tyres and interest rate fluctuations. They also pointed out the importance of being aware of residual or balloon payments that may be built into the finance agreement to make monthly payments more affordable, as these additional amounts will become due at the end of the contract. By considering all these costs, you will be in the best position to make an informed decision about the car that suits both your lifestyle and budget.
One of the main lessons to come out of the discussion is that buying a first car represents much more than just buying a car – it’s a symbolic leap towards the achievement of your dreams and aspirations. It’s also a milestone that validates your hard work, determination, and dedication to achieving financial and career success. By making an informed decision, and partnering with the right experts, buying your first car can be the driving force that propels you towards the future you desire.
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