Five points to consider when buying your next brand-new car

With the automotive industry experiencing a slowdown in 2018, the entire industry is pushing forward to help continue the momentum in growth it has enjoyed in the last several years.

Many factors contribute to the slowdown: the TRAIN Law, higher forex rates, higher interest rates, and inflation among other things.

Yet the Filipino buying public as well as car manufacturers are resilient and continue to push forward harder than ever before.

What does all this mean for you and me as potential car buyers? It’s a great time to look for deals!

Here are some tips to consider when buying a brand-new car.

1 The lowest downpayment isn’t always the best deal. If you read the fine print closely, the interest rates can be a full 2-3 percent higher per annum than if you shopped around and looked for your own bank financing.

From a cash flow point-of-view, a low downpayment might be the easiest way to own your new car, but you will be paying significantly more especially if you plan to amortize the balance of the cost over three or more years. Keep that in mind.

2 Budget for insurance, AOG (Acts of God), and force majeure insurance options. Most first-time buyers are surprised by the cost of insurance, especially when you tack on the AOG and force majeure options in the policy.

If this is your first car, and you expect to use it as often as possible, and you knowingly go through areas that flood regularly, it’s best to budget a significant amount for insurance.

As a rough estimate, an insurance policy that can cover the entire cost of your car with AOG and force majeure will cost you around 7 percent of the total cost of your car.

Thus, if your car costs around P1 million, expect your insurance to be around P70,000 for the first year.

This amount decreases each year since your car depreciates, and insurance is based on a depreciated and/or current fair market value.

This amount varies depending on the insurance company, so check around for the best comprehensive insurance deals.

Tip: Try to deal directly with an insurance company, rather than through an insurance broker who will add on processing fees and commission.

3 Check for warranty and extended warranty coverage. If your first or next car will be a workhorse, it is ideal to check which car make and model give the longest warranty for hassle-free motoring.

Some brands come with only a modest 3-year/60,000-kilometer warranty, whichever comes first, while others give a 5-year/100,000-kilometer warranty.

For luxury brands, some offer an extended warranty with an additional cost upon evaluation of your car’s condition.

Some brands, like Mazda, offer a free 3-year PMS servicing under their Yojin 3 program wherein the cost of normal consumables such as engine oil, oil filter, spark plugs and air filter are replaced for free during the first three years of ownership.

4 Research on long-term ownership experience. If you plan to keep your car beyond five years, you should consider checking the ownership experience of the brands on your short list, primarily for reliability and longevity.

Will the car make and model you plan to buy run reliably after five years or longer of normal use?

Another concern are big-ticket items and body parts that will need attention after five years and usually over 60,000 kilometers, or are not covered by insurance in the event of an accident.

Some brands have body panels, headlights, windshields, bumpers, A/C compressors, starter motors and alternators that are surprisingly very expensive from the dealership.

Check to see if these big ticket items can be sourced outside of the dealership network. Long-term, this can truly dictate how pleasant/unpleasant your ownership experience will be with the make and model you plan to buy.

5 Check for the friendliest car dealership with good aftersales reputation. While all car dealerships of the same brand strive to deliver equally good service, the truth is some deliver far better buying and aftersales experience.

Find a dealership that is competent, has good aftersales service and listens to your requests, as well as continually seeks your opinion on their service to you.

Tip: Find out which dealership consistently tops the brand’s internal skills Olympics competition (a competition amongst car service mechanics who can perform repairs in the best, most accurate, fastest and most consistent way) among different car dealerships worldwide.

I always bring my car to the dealership that has consistently won or placed in the top three for their skills Olympics contests annually. I’ve never regretted that choice.