Maybe you don’t want to spend a chunk of your paycheck on a car. Perhaps you want to drop some cash into a side hustle, studying or simply want to save more.

The truth is you don’t have to skimp on style, safety or reliability if you’re looking to buy a pre-owned vehicle.

Appreciate the depreciation

The big plus here is that the previous owner absorbs the greatest depreciation in value on the vehicle.

Typically, a new set of wheels can lose up to 40% or more of its value within the first three or four years after purchase, in part due to the 15% VAT paid on a new vehicle. And, the more expensive the car, the more you lose in the depreciation spiral.

For you, this means a lower purchase price, a lower vehicle finance amount and even reduced monthly insurance fees when choosing the pre-owned option.

If you’ve saved up enough, you can buy a car cash and save on interest. But, if you must finance it, it will still be more affordable than buying the same car brand new – and you’ll probably be able to negotiate a better price for it.

In fact, you may be able to sell a pre-owned vehicle for almost the same price you bought it for in a couple of years – if you have looked after it and the market hasn’t changed dramatically.

There are also fewer hidden fees associated with new cars (delivery and processing fees etc).

Every car has a past

A used, demo or pre-owned vehicle has a history. It’s important to make sure the car you’re looking at has appropriate paperwork and reliable service records. The odometer reading will probably be your first clue as to its past use.

Ideally, lower mileage cars still within warranty are your best options. These are considered ‘good as new’ rather than ‘used’. You can take out an extended or unlimited mileage warranty on a pre-owned car, so you’re not stuck with costly maintenance bills.

Take a closer look

When buying a second-hand car, make sure that the vehicle not only looks good – but that it is in great shape under the hood too. While marks or dents to the bodywork are obvious signs to look for, mechanical problems aren’t always easy to spot.

Just because a vehicle has a road worthiness certificate doesn’t mean it’s without problems. For peace of mind, AA has partnered with DEKRA, a world leader in vehicle roadworthy, technical and safety inspections. For your own peace of mind, you should also consider taking the car for a test drive and see how it handles on the road.

Find your match

Find pre-owned cars through web searches, or a visit a car lot or showroom in your area.

Don’t get rooked by unscrupulous or shady dealers. Stick to an authorised reseller, reliable franchise or an AA Quality Assured dealer.

Often, dealerships will run specials or seasonal sales. It’s sometimes worth your while to shop around and keep your eyes out for some great deals.

Run a basic background check to make sure you’re not buying stolen property and check that the VIN number matches the number on registration and other documents.

Finance it

The best ways to finance a car are through financial institutions. There is a myth that a bank or financial institution will shy away from financing a car that is not new. Most banks will look at financing any vehicle if your credit and other criteria are satisfactorily met.

If you decide that you want a brand new vehicle, then use timing to your advantage. For example, wait a few months until the demand for new models has cooled and the price comes down.

Better yet, wait until the sales periods between December and March when dealers are looking to sell off last year’s models and may offer great deals.

Bespoke short-term insurance

Aon South Africa is Investec’s approved insurance broker and a leading provider of private insurance. If you have a Private Bank Account, you will enjoy preferential rates negotiated exclusively for Investec clients. You will pay zero basic excess if you have an accident or total loss claim in the first year of insurance.

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