As we come to the end of the youth month, I want to share with you the critical considerations when you are buying a car. I feel this is important because many people are driving cars that are far beyond their affordability and once you have bought a car you cannot afford, it is near impossible to reverse the decision.

Do NOT

1. Do NOT buy a car on residual or a car with a balloon payment. If you do NOT have enough money to put down a deposit before you buy the car, why do you think you will have the money for the balloon at the end of the repayment period? By buying a car with a balloon payment, you are putting yourself into a trap where you might end up having to roll forward the balloon into a new car. I won’t get into all the details here save to say you are putting your finances at risk and you will end up buying gap covers and might get into a mess. Buying a car on balloon simply means you cannot afford that car
2. Do NOT let your car repayments be higher than 20% of your net income otherwise you will have little money to live on month to month
3. Do NOT take credit life on your car because once your car is paid up, all the monthly premiums you were paying would be money down the drain. I saved myself R48 000 by refusing to take credit life when I was buying a car. 

DO

1. Save for a deposit for the car you want to buy, at least a 10% to 20% deposit. This is also a good way to test if you can afford the car repayments
2. Remember that the cost of insuring the car is one of the highest costs of owning a car. Take note that some cars have higher insurance costs because they are the hijackers favourites. Get a quote on the insurance before you even buy the car and remember that the younger you are, the higher your insurance costs
3. Buy a  fuel efficient car
4. Consider buying a low mileage car from an auction to get a good deal – some of the car dealerships buy their cars from auctions after all
5. Do shop around for the best insurance rates
6. Read chapter 4 of my book From Debt to Riches entitled Is Your Car Driving Your Destiny?, for more tips on buying a car

If you are buying your FIRST CAR, ensure that the colour of your is easy to repaint or paint over in case of an accident.