Buying Tips

We really want to help you buy a car regardless of whether we are involved at all.

Hence we thought we could share our experience with you which might help you decide between all the various quotes you are going to receive from different sources when buying a car.

When reviewing alternative vehicle offerings (or quotes), please remain aware that you will always be incurring 4 basic costs no matter who you decide to use for financing or who you decide to buy the vehicle from. These costs are:

1. The vehicle purchase price.
2. The finance cost on the loan to purchase the vehicle.
3. An initiation and monthly service fee by the financier, as per the National Credit Act.
4. “On the road cost”. Generally this includes the first annual licensing fee and registration fee of the vehicle. You could do this yourself but normally vehicle dealers offer to do this for you.

The four costs described above will often be configured in confusing ways making it difficult for an individual to compare offerings. For example; one financier may offer a low financing rate, but high documentation fee to mitigate the low rate. In the end, the only way to fairly assess alternative quotes is with a discounted cash flow model to determine the lowest effective net present cost of purchasing the vehicle.

In addition:
Most formal financing institutes in South Africa will charge a “documentation or initiation fee” in addition to the monthly service fee and finance costs. This fee is normally charged to cover the bank’s cost of processing your credit application and granting of your loan. The SMVPS strives to ensure that ABSA will always charge an extremely competitive documentation/initiation fee.