#TheySeeMeRidin: So, you want to buy a car?

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There’s nothing like buying your first pair of wheels. You imagine yourself driving into the sunset on a hot summer day while your favourite tune blasts on the radio and bae feeds you a slice of pizza. No? Just me? Whatever…

Buying a car is hella exciting, but don’t let the excitement distract you from getting cosy with the facts of a vehicle finance contract.

Here are five things you should do before signing a vehicle finance contract:

1     Ask, ask and ask again

–    When you arrive at the dealership to finalise the deal, you’ll be guided through the process by the dealership’s appointed finance and insurance representative (F&I).

–    F&Is are registered with the National Credit Regulator and, if you have any questions about your finance or deal, this will be the last time to ask them.

–    The F&I will have a checklist of important points that you have to understand completely before signing your contract and taking delivery of your new car.

–    Don’t rush the process.

2    Get familiar with finance

–    You’ll be given the option to choose a fixed or variable interest rate. Know the difference and how this will affect your budget in the short and long term.

–    A fixed interest rate on your loan might be higher than the variable interest rate at first, but it will remain the same for the duration of the loan. Conversely, a fixed interest rate might be lower than the fixed rate, but will change when the Reserve Bank changes the interest rates.

–    Make a decision about the contract period. This is how long you’ll be paying off the loan. You can choose from 12 months to up to 72 months. However, the longer the contract, the more you end up paying in interest and fees.

–    Consider putting down a big deposit. It will save on interest payments and have lower monthly repayments.

3    Understand extras

–    You'll be given a breakdown of what you are paying for. This will include the vehicle invoice price as well as any delivery, licensing and admin fees, as well as any value-added extras (that include things such as dent protection, warranty and service plans) you wish to include.

–    There are also products that protect your finance. These include value-added insurance packages that will refund your deposit if you have a major accident or your car is stolen, and gap cover insurance that will settle the car loan with the bank if your comprehensive insurance does not pay the entire amount.

–    You will be given the option to include these products in your finance package, allowing you to spread out their payments over the term of your contract. Or you can opt to pay for them in cash.

4    Get insurance

–    One of the important documents to take along when signing your contract is proof of insurance. This applies only if you have an existing insurance policy and have opted to arrange your own insurance. If you have asked the dealership to arrange an insurance quote, they will have this document.

–    Insurance is vital because you will not be allowed to drive the car out of the showroom without proving to the bank that the vehicle is insured. On the off chance that you are involved in an accident straight after taking delivery of your new car, you can rest assured knowing that your insurance policy will cover everything.

–    The F&I will also explain that you are required to maintain comprehensive insurance on the car for the duration of the finance contract. This protects you and your finances: If anything happens to the car, the insurance will pay out the insured value of the car and you will not have to worry about paying back the loan for a car you no longer have.

5    Beware balloon payments

–    You can opt for a balloon payment, which can result in lower, more affordable monthly repayments. If you choose this option, make sure you know how much you will have to pay at the end of the finance term.

–    Try to save money to help pay this off at the end of the contract, or else you’ll need a new loan to cover the balloon payment.