First Gear English edition, First things first (Chapter 01)

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Everything you need to know about your first car.

Welcome to the wonderful world of wheels!
We know that every single person dreams of owning a car. It’s understandable: a car epitomises independence. Success. Stature. Mobility. The freedom to go your own way. But we also know that the decision to purchase a car can be fraught with challenges. What car do you buy? What can you afford? What about the servicing requirements? What safety features should you look out for? What about safety out on the road? These and many other important questions plague your mind. First Gear aims to address all these topics and many other essential issues associated with car ownership. We have canvassed the opinions of the world’s leading authorities and this book aims to give you independent, authoritative and utterly essential advice. We want to take the mystery and malaise out of car ownership, and replace it with easy to follow advice and tips… so that your road to car ownership isn’t filled with potholes! We trust that it will provide you with a stress-free introduction to the world of wheels.

Enjoy your first car; you’ve worked hard for it!

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First Gear English edition, First things first (Chapter 01)

  1. 1. CHAPTER 1: First things first Money isn’t everything but it sure does help when you want to buy a car. So, unless a long-lost great uncle has left you a small fortune, the first question most of us need to ask before shopping for a new car is: “What can I afford to drive?” But your answer needs to take into account more than just the purchase price. This, we’re afraid, is just the tip of the motoring iceberg. The costs of financing, maintaining, repairing and insuring your car – along with incidental expenses such as parking and registration fees – also need be factored in. As Ford Asia Pacific and Africa Director of Sales Mark Winslow points out: “It’s not only the price of the car itself, but the cost of ownership that impacts affordability.” Of course, most guys – take young Jack for example – can’t wait to take their girlfriend for a cruise in a flashy new convertible or a racy Focus RS. After all, they do have a certain image to maintain. But, for most first-time buyers, the more affordable Figo subcompact or the Fiesta are more realistic choices. And the really terrific news is the fact that they are still fun cars to drive – you really don’t need to spend a small fortune in order to have a cool, hip motoring experience. It all boils down to what you can afford. “Customers should not feel too much pressure from their car payment,” notes Ford Automotive Finance (China) Vice President of Sales and Marketing Eric Chou. “If a customer chooses to finance a car, his monthly dispensable income (money left over after taxes, rent or mortgage payment, and basic living expenses are deducted) should be more than twice the amount of the monthly payment. 6  First Gear   First Gear  7 
  2. 2. fan pages exist for many new vehicles, and “Or, to put it another way, the customer’s their personal finances, because everyone estimated fu el mileage to lots of helpful information, from both average bank account balance should be should aim to save at least a small portion many litres of figure out ho petrol it will w current owners and the manufacturer, can at least double the amount of the car pay- of their pay check. where you ne take to get yo ed to go. Don u be found there. ment,” he adds. “The first question to ask is how much you for future pr ’t forget to al ice increases low Even the most reliable cars on the market The authoritative Consumer Guide can afford to pay on a monthly basis,” says you could ru at the pump n out of mon – or need periodic maintenance and repairs. Automotive says it could even be a good Keith Watson, director of strategy and out of fuel! ey before yo u run Tyres, filters, fluids and belts need to be idea to shop for finance before going car business support, Standard Bank. If the car When estim ating the co replaced regularly. A stray pebble on the hunting. “Decide how much you can afford is going to add 10 percent to your monthly new car, repa st of owning irs and maint a highway could damage the windscreen. and how much you are willing to pay debt, that is probably manageable. As much come into pl enance also ay. Once you’ And, if you are unlucky and have an before you shop for a vehicle. If, like most as guys such as Jack get a kick out of driving model and br ve chosen th and that tickl e accident, you could be replacing a fender consumers, you have to borrow money, the latest, sexiest set of wheels, your car a good idea es your fanc to gauge the y, it’s or headlight – and more. shop for a loan before you shop for a should not cost more than your house! target vehicl reliability of e. Informatio the vehicle,” it suggests. How much fuel your car will consume is of repairs a sp n about wha ecific model t types Standard Bank of South Africa advises also an important budget consideration. over time is is likely to ne available on ed prospective car buyers to very carefully Estimate the average distance travelled consumer gr line and with consider how a car purchase will impact each month, and divide this by the car’s oups, as wel consumer co l as data abou mplaints an t d recalls. Fa cebook 4.5l/100km The fabulously low fuel consumption of the Fiesta 1.6 TDCi – a fun but sensible buy. 8  First Gear   First Gear  9 
  3. 3. The cost of replacement parts can vary greatly. Imported vehicles are often the most expensive – and take longer – to repair because spare parts may need to be shipped 7 out of 10 from abroad. The number of car purchases in The more frugal among us save up all their pennies before heading to the dealership to make their purchase. which women are involved in the UK. But most car-buyers only have enough money saved for a down payment and will need some sort of financing plan to complete the sale. Dealer finance is often the most convenient and popular option. At reputable dealerships, the staff will sit down with the customer and tailor a payment plan to meet their individual needs, after calculating monthly income, household expenses, mortgage payments, and food and entertainment expenditures. They can adjust the amount you must pay each month, or the number of payments you have to make over the lifetime of the contract, depending on the buyer’s financial situation. 5 Five fast buying tips • Keep your emotions under control. Be conservative and don’t rush; you’ll have to live with this purchase for years to come • If you’re financing your car purchase, your monthly payment should not put a big strain on your budget. Don’t bite off more than you can chew • Make sure you understand all the terms of your buyer’s contract, paying special attention to the interest rate and whether there is a balloon payment required • Figure out how much it will cost to keep the car running before you buy. Remember: cost of ownership counts! • Shop around for the best insurance rates10  First Gear First Gear  11
  4. 4. Keep in mind that lower monthly In conclusion, it’s very important not topayments mean you’ll be paying off thecar for a longer period of time, and more overreach. (You know what they say about car sickness: it’s the feeling you Insider insurance tipsof your hard-earned money will be going get when the monthly payment is due!) Insurance requirements vary from country to thrilled; this was a price he could afford.towards the interest. And remember that So it’s best to be conservative when country, so be sure to check the laws in your But, after reading the policy closely, Jack wasinterest rates rise and fall. Rising interest calculating what monthly instalment you country before you purchase a vehicle. confused.rates could affect the terms of your car can afford, especially if this is your first Irrespective of the rules and regulations within “What’s this bit about a USD 2,000 ‘excess’?”repayment, along with other debts like a car purchase. It’s seriously bad news to your specific country though, insurance is a no- he asked.home loan or credit card. Even a small default on a car payment; this could brainer, because that car of yours represents a The salesman explained to Jack that, if he hadrate hike could raise your monthly affect your credit rating and thus your massive investment! As such, Ford Asia Pacific an accident, he’d be responsible for any repairspayments across the board and bust ability to get a loan, buy a house, or a and Africa Director of Sales Mark Winslow advises that cost less than USD 2,000. If the car need-your budget, so it’s advisable to allow for second car in the future. customers to purchase comprehensive coverage ed two new doors and a fender, and the bodysome wiggle room. In certain instances, to fully protect their investment. “If you can’t shop charges USD 2,300 for the job, Jackyou can fix the interest rate (this means afford comprehensive insurance, perhaps you would have to pay USD 2,000, while the insur-that it will neither increase nor decrease, should consider a less expensive car,” he says. ance company would pay USD 300.so you know exactly what you will be Sports cars are generally more expensive to insure, “Wait a minute!” Jack told the insurancespending for the entire duration of the and young drivers often pay higher monthly pre- agent. “I can’t afford to pay USD 2,000. After Ifinance plan). Chat to the dealer aboutthis possibility; he/she will be able to 611 million miums than older, more experienced drivers with an established safety record. For smaller monthly payments drivers can opt to buy this car, I won’t have any savings left!” The salesman crunched the numbers again,explain exactly how it works. The predicted number pay a larger “excess”, or deductible, in case of an and came up with another plan for Jack, which provided the smallest “excess” possi- of cars in India by 2050, accident. This is the amount the car owner must ble, USD 100. But this time, the monthly pay before the insurance company will reimburse making it the world’s him/her. A higher deductible means lower pay- payment came out to more than USD 235 per month. Before you sign on the dotted line, largest car market. ments, and vice-versa. “That’s almost twice as much!” Jack pro-make sure you can see the bigger picture For example tested. “I can’t afford that!”and understand all the payments that Jack visited his local insurance salesman to see “I’m very sorry, sir,” the salesman replied.need to be made. Some finance plans how much it would cost to insure a new Ford “But this is how insurance works. The morecall for what is known as a “balloon Focus. Since the down payment on the car you pay up front, the less you will have to If you begin to miss monthly car was going to wipe out his savings, he was pay for any damages later. If you want topayment”. This is the total balance payments, sometimes the dealership looking for the lowest monthly payment pay the minimum premium possible,remaining on the car at the end of the can arrange a new payment schedule. plan possible. He didn’t want to spend that’s fine. But further on down the road,payment plan, and it usually needs to be But, if you fall too far behind, you could more than USD 1,500 per year for compre- it could cost you a lot more.”*paid in full as a lump sum after all the lose the car entirely... and all the money hensive coverage.monthly payments have been made... you have invested thus far! The salesman, after factoring in Jack’s Source: Progressive Insurance Co.which even though it’s at the back of So make 100 percent sure you commit driving record, age, marital status andyour mind, is still a nasty surprise if you to a monthly payment you can handle to vehicle model, offered Jack a plan that *This statement is a guideline only, anddon’t have the cash. If you don’t avoid an unpleasant visit from the Repo fitted his budget: USD 130 per month not advice that should be relied upon.understand all the terms and conditions Insurance advice must be sought from Man (just in case you don’t know this would pay for comprehensive cover-of the contract, ask an independent an accredited financial services provider. guy; he’s the chap who comes to age of the new Focus. Jack wasfinancing professional to look it over repossess your possessions when youbefore you make any firm commitment. don’t pay!)12  First Gear First Gear  13

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