UNDERSTANDING YOUR CAR PURCHASE AGREEMENT Whether it’s your dream car, a gift for a loved one or an affordable run-around for your business, things can get a little stressful when it comes to the fine print of a purchase agreement. Between all the legalese and lengthy clauses, it may be tempting to simply nod in agreement and immediately sign on the dotted line without fully understanding what you are essentially agreeing to. For those who are new to the world of car purchasing – or who think terms like ‘voetstoots’ sound interesting but have no idea what they mean – Imperial Auto has put together a list of some of the most commonly used words and phrases found in car purchase agreements. These are not only handy in understanding the ins and outs of contractual agreements, but will also help you channel Dad’s confidence at the negotiation table. Voetstoots – To buy a vehicle ‘as is’, or ‘as it stands’. This means that the buyer accepts the potential risks, should the car come with any defects, but also means that the vehicle is transferred to the buyer with all benefits, such as new rims or tinted windows, intact. Balloon payment – Also referred to as a ‘residual value’. It is a portion of a loan that is made payable at the end of the loan term, after all the monthly repayments have been paid. This allows the borrower to reduce their monthly instalments for the repayment period, in exchange for paying the financier a lump sum at the end of it. Book value – A price indicating a vehicle’s current value, according to market prices and standardised car valuation guides. You can find out the current value of your car using online buying guides, or through our nearest car dealership. Cooling off period – A stipulation of the Consumer Protection Act, this refers to a period of five business days after the sale of a vehicle that allows the buyer to cancel the contract – no questions asked. However, this clause can only be invoked if the vehicle was purchased as a result of direct marketing (SMS, email or cold calls, for example). Interest rates – A fixed interest rate allows you to set the rate of interest payable on a car loan for the duration of the repayment term. This guarantees that your monthly repayment rate stays the same, while a linked interest rate fluctuates depending on the country’s prime lending rate. This means that your monthly instalment increases if the prime lending rate goes up, and decreases if it goes down. Maintenance plan – Sometimes referred to as a motor plan. This usually covers everything a service plan would, along with the repair, replacement or maintenance of certain wear-and-tear items, such as brake pads or shock absorbers. However, it is important to keep in mind that each maintenance plan will differ from the next. Roadworthy certificate – A document that guarantees a pre-owned vehicle is free from defect and legal for road-use. Service plan – Considered a more budget-friendly way of keeping certain aspects of your car, such as air filters, oil, tyres and brakes, in tip-top shape. A service plan covers repair, replacement and labour costs involved in servicing these parts at a fixed, once-off initial cost. Value-added products – additional products or services that will enhance the driving and vehicle ownership experience. These include extended service or maintenance plans as well as insurance products to protect you against the costs of major repairs, damages or accidents. These are just a brief summary of some of the most commonly used terminology in contracts. If you’re still a little confused or need a little more help understanding your car purchase agreement, visit an Imperial Auto branch near you and speak to one of our friendly consultants. You can also search for the best deals of new and pre-loved cars on www.imperialauto.co.za. Leave a Reply Cancel ReplyYou must be logged in to post a comment.