A young professional’s guide to buying their first car
Buying your first car is exciting, but it can also be a daunting experience. It helps to have guidance and that’s exactly what Nedbank aims to give. The bank’s range of vehicle finance options, online tools and personalised banking assistance will enable young professionals to make an informed decision while staying within budget.
Hosted in partnership with TimesLIVE, Nedbank’s recent Private Clients #1000Connections event, included a panel discussion to help young professionals buy their first car — from deciding on a budget to applying for finance.
Hosted by Aurelia Nxumalo, this panel discussion featured Fiona Brown, head of sales at Nedbank Motor Finance Co (MFC) in KwaZulu-Natal; Caryn Buys, corporate sales manager at BMW; and Siphosethu Nkosi, a beauty and lifestyle influencer. Watch the recording of their discussion below.
“The first step in buying a new car is deciding on a budget,” said Brown. She pointed out that insurance is a compulsory part of most vehicle finance contracts and, together with fuel and maintenance costs, should be taken into consideration when working out what monthly car repayment you can afford.
“Opting for a used car means you may be able to afford a better class of vehicle than you would if you bought a brand-new one. When buying a preloved BMW, you’ll have peace of mind in knowing that you’re buying quality,” said Buys. Another advantage is that there may be a few years remaining on the car’s original motor plan.
“Once you have found a car that’s within your budget, you can apply for vehicle finance. The application process is the same for both a a new or used car, but older models may attract higher interest rates. Used vehicles tend to be the cheaper option for you – but new vehicles provide more peace of mind,” said Brown.
There are several ways to apply for vehicle finance, said Brown.You could submit an application via the car dealership or through your your bank. In the case of Nedbank, you could also apply for finance yourself via the Nedbank MFC website. The bank will then assess your application and decide whether you qualify.
“Your good credit record is a crucial aspect that’s taken into consideration during this assessment,” said Brown. This can be a stumbling block for young professionals who, having just started out in their careers, may not have had the opportunity to build a solid credit history. Nedbank MFC understands this, she said, and is committed to supporting first-time car buyers.
According to Brown, establishing a good credit record is not necessarily about borrowing large amounts of money, but rather demonstrating that you have the discipline to meet the required repayments on time. For instance, having an account at a clothing store and repaying it in small instalments over several months can contribute towards building a favourable credit history.
As a freelancer with no payslips to prove her creditworthiness, Nkosi said she ensures that all her income goes through her bank accounts to establish consistency and help build up her credit history.
“Buying your first car is also an opportunity to establish a good credit profile, which can help you to secure finance for future purchases, such as your first home,” said Brown. As such, she said, it’s important to take a conservative attitude when determining the budget for your new car to ensure you can meet all the monthly repayments.
Once the bank has approved your finance application, it will draw up an agreement which, once signed, is a binding financial contract. For this reason, it’s important that you understand every detail of the way the deal is structured.
“Transparency is key,” says Buys. It’s the dealership’s duty and responsibility to ensure the buyer understands what they are paying for and that there are no hidden costs. Balloon payments and residuals (where a lump sum must be paid at the end of a loan term) and link-based interest rates (which may fluctuate depending on the repo rate) must be clearly explained to the buyer.
Nkosi said she remembered the excitement of buying her first car and no longer being part of the “taxi or Uber gang”, but warned against being unrealistic. “Car dealerships are persuasive and more expensive cars are tempting, she said, but balloon payments ultimately cost a lot more in the long run,” she said.
Find out if your employer has a special financing deal in place with their bank for employees. Weigh up all the options and, if you bank with Private Clients at Nedbank, get advice from your dedicated banker.
This article was sponsored by Nedbank. Terms and conditions apply.
Nedbank Ltd Reg No 1951/000009/06. Licensed financial services and registered credit provider (NCRCP16). Terms and conditions apply.
