What influences car costs?

Deciding what car to acquire is a long and strenuous decision. After all, what you’ll be paying for isn’t only the vehicle but its various kinds of maintenance. Repairs, parts, fuel all end up costing a great deal – sometimes as much as the vehicle’s price itself. And how that price is set is itself an area of concern.

The first question is where we will get the money. Banks are of course the first point of call. But these financial institutions are facing

TIMESLive notes: “banks that finance car sales are struggling to get their heads around how much demand there is for new cars.” Pre owned cars in South Africa, then, might be a better option for all sorts of reasons – not least that banks are scrutinising the demand for new cars.

But what goes into the pricing of used cars. The main factors are a car’s conditions and its mileage – adding to this are colour, location, options and so on.

Alec Gutierrez, senior analyst for Kelley Blue Book, a notable vehicle pricing resource told Investopedia:

“As mileage increases, so does wear and tear. It goes without saying that a potential purchaser would be less inclined to pay top dollar for a 200,000-mile car [as opposed to] one with 30,000 miles.”

It should be noted that wear and tear doesn’t only come about through mileage. Poor maintenance can mean a car with low mileage still appears rough, with torn seats, stains, broken dashboard or lights and so on. This will definitely also affect the pricing – and what potential customers are prepared to pay.

Location really does matter in terms of what sells: after all, conditions will dictate the necessity of the kind vehicle being acquired or in demand. Sports cars and convertibles command higher prices by the coasts and in warmer climates. Trucks, four-by-four, and SUVs are highly popular and sought after in snowy or heavy rural areas. After all, there’s a reason bakkies are so popular among farmers and those who live in rural areas.

All of this is in somewhat stark contrast to how new cars are sold. Bankrate lists all sorts of “secret” ways that new cars are priced, such as not listing price with options, dealer incentives, invoice prices and so on.

Fewer things can be hidden with second hand cars, though that doesn’t mean they won’t be. Whether you’re buying a new or used car, it’s important to do research – not just on the car itself but on the dealership and current climate of vehicles, to ensure you are getting the best deal possible.

 

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