Picture: THINKSTOCK
Picture: THINKSTOCK

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THINKING of buying a car before potentially heavy price increases kick in at the beginning of next month? Banks have some advice: count to 10 before you sign anything.

Even before the latest rand-exchange crisis, analysts were warning of year-end price increases of up to 10% in reaction to rising import costs.

More than 70% of new cars sold in SA are imported, along with many of the components used in SA-built vehicles.

WesBank’s Rudolf Mahoney said this week rand hedging by motor companies would cushion some of the additional pressure caused by the local currency’s latest crash, "but only for the next three or four months".

So it is definitely tempting to get in quickly, particularly as manufacturers and dealers are offering all kinds of discounts and other inducements to attract customers.

But do not get sucked into something you may not be able to afford later, Nicholas Nkosi, of Standard Bank’s vehicle and asset finance division, advises.

What looks a bargain today might turn out to be anything but during the course of a four-or five-year finance agreement.

SA was in the early stages of an upward interest rates cycle, he said.

Inflation was also expected to rise. Exchange rates were volatile. What was certain was that disposable income would shrink and "consumers will be increasingly stressed financially".

Anyone thinking of buying a car, therefore, should build a "buffer" into their financial calculations to allow for the unexpected, Mr Nkosi said.

"Work from the basis that all the costs in your life are going to go up."

Mr Mahoney suggested that consumers, when calculating the affordability of a new vehicle, should work on the basis that their disposable income would shrink 10%.

Mr Nkosi said the first question consumers should ask themselves was whether they actually needed to replace their current vehicle. If so, did the next one have to be new or used.

"Whatever vehicle you get, don’t rush into it.

"This is a buyers’ market. Consumers are spoilt for choice. Shop around. Take your time. Make the right choice. The wrong one could cause you financial stress for years to come," he said.