If you are going to take a car loan, buy a Toyota

Buying a car is not easy, particularly if it is your first. The desire to buy a car and achieve some degree of mobility ranks high on the list of priorities for many workers. This is not always possible to achieve, given that salaries are hardly enough for up-front payment of a motor vehicle.

The past few years have seen a leap in the number of motor vehicles on the roads with private cars accounting for 30 per cent.

The is largely fuelled by availability of credit. Where previously an individual had to scrimp and save to buy a car, it is possible to secure a loan within 48 hours, depending on your credit score. Some employees have access to car company loans. Buying a car involves a series of events, which when done right, should eventually land you behind the wheel. Securing the financing is an uphill task. There are numerous commercial banks from which you can borrow and, in many cases, you need not be a customer. 

Each bank has a list of conditions, which include the age of the car. The age is considered critical in calculating the resale value of the car, and depending on the customer’s relationship with the bank, they can also negotiate the percentage price of the vehicle to be financed.

There are also banks which will give an exemption if you are a repeat customer and you have been making repayments. Financing of motor vehicles no longer a big deal.

The maximum amount for any car loan is determined by your ability to pay, therefore the higher your income, the higher the amount of money you can borrow. The car you are buying becomes your security for the loan. Because the loan is pegged to your salary, you need a letter of introduction from the employer on the terms of employment.

The bank will retains the log book until the loan is fully paid. Loss of a job doesn’t mean loss of your car. You can always talk to your financier to reschedule the loan.

Once you have done your research, compared prices and finally identified a suitable car, you then obtain a pro-forma invoice from the seller, then apply for loan. You can also apply for a loan from an institution you do not bank with. In this case some institutions will ask for six months statements from your current bankers to assess the request.

To find a car, one can scan online listing like Magari Poa, newspaper classifieds or notices posted at shopping malls. The individual can also opt to visit show rooms, car yards or the now famous Car Bazaar held every Sunday at Jamhuri Park.  

You should take your time to look at all the options, the field has become very crowded, so price differences are small. However, it is advisable to go to different showrooms to know where to start bargaining from.

Buyers are spoilt for choice, with most models available on the ground and many others on order. The cars have been washed and waxed and all look their best. However, it’s not the shine but what lies beneath that matters. The need for an expert opinion to evaluate the condition of the car is necessary. This can be done by taking the vehicle to a registered mechanic, a jua kali garage, really at your own risk, or the Automobile Association (AA) of Kenya. In fact, AA are the best. They’ll be able to give you an independent opinion, point out the major problems of the car and what it’s going to cost you. 

This is important when buying a second-hand car, because chances are that several parts will need replacement, and you must know at the onset how much this will cost you.

Among the key factors to consider when shopping for a car is its serviceability. You could end up getting a car that’s cheap to buy but very expensive to maintain. It could even end up more expensive than a brand new car, in the long run.

Consider also the resale value of the vehicle. After you’ve used it for three or four years, how easy will it be to sell it? A factor that could also affect your returns on your resale is the length over which you have repaid your loan. 

If one opts for the maximum repayment period of 36 months, the interest paid will have greatly inflated the purchasing price, reducing any profits anticipated in a resale. 

With the most popular brands in Kenya being Toyota and Nissan, the first time buyer should also consider the performance of the car as this will determine its fuel consumption and maintenance.

The key is ensuring that you get good resale value. The age of the car is not seriously an issue. What is important is how the car is used. You can have a car that is 15 years old and is very serviceable. You could also get a two-year-old car that is a wreck. That is why you need an experts’ opinion before purchase. 

 Financiers usually insist on a particular age as it is an indicator of the vehicles’ condition, though not in all cases. Mechanically, if the car is good, but older, I would still buy it myself.

This article first appeared on Daily Nation