Colin Bower, one of Driveline’s Business Consultant’s in the Bay of Plenty shares his top 6 tips for buying a new car.
- Decide your criteria (must haves): size, seating, power, economy, image, budget price-range/payments, and write it down. Don’t get hung up on brands just yet. Go on-line and make a short-list of vehicles that fit your criteria and your budget. www.driveline.co.nz is useful to show what new vehicles are on the NZ market and is segmented by size, type etc.
- Once you’ve decided on your budget, and before you go test-driving vehicles, pre-arrange your funding from a reputable, convenient and competitive source, and stick to the budget. This is now easier than ever with some lenders/brokers being set-up to enable you to calculate your own finance on-line. www.driveline.co.nz has lease pricing fully transparent on-line with quote/application information and even a used vehicle finance calculator.
- Then, set about test-driving the vehicles on your short-list. Advise the seller that you have your funding already in place and are essentially a cash buyer. If you have decided to lease, the lease company or broker should advise you where to go to test drive the vehicle and be assured of getting the best attention/service. Note. The quality of service in the motor industry still varies wildly, and some dealers will try to talk you into their own finance which can substantially improve their margins. Be aware that some may also hold back some of the available discount, which is only natural as contrary to popular belief, dealer margins (particularly on new vehicles) are quite slim. In the case you choose to lease, make sure the full manufacturers lease company discount entitlement has been passed on to the lease company (lessor) which in turn lowers your payments, and the impact of depreciation. Note. Many new car dealers rely on manufacturer target/incentives/holdbacks to make the deal viable/profitable so at certain times of the month/year, ‘deals’ are available. Ask!
Ask friends and associates who have recently purchased about their experiences (but be aware of the Kiwi inclination towards unswerving and sometimes irrational brand loyalty). I am always happy to help break a deadlock or pass on the benefit of my fifty years of experience as a dealer and general ‘petrol-head’, and my advice to you is free.
- Do the Pros and Cons. When you think you are ready to make your final decision, take the emotion out of the equation by heading up a blank sheet of paper: You have probably heard the saying that, ‘this is one of the biggest financial decisions (after a house) that you are likely to make’.
- Think like an accountant:
- You know that whatever your final choice of vehicle, it will devalue at the rate of approximately 50% every three to four years.
- Do not use an asset that is increasing in value (home, business, and investment funds) to secure a depreciating asset. The vehicle should provide its own security and leave your other lines of credit free and secure. That will also ensure the finance rate is locked in for the period, and that you pay the depreciation off as you use the vehicle.
- Where possible, take advantage of any discount entitlements available by utilising the buying power of a major corporate or lease-company or broker.
- Claim everything that you are entitled to claim. There can be numerous benefits that you may not be aware of. And be aware, not all leases are equal, and some contain clauses that may not suit your business.