Pre-loved cars:
SHORT-TERM INSURANCE
Pre-loved cars:
Risk, bargain or both?
By Herman van Heerden, PPS Short-Term Insurance Chief Executive Officer
In South Africa, the market for second-hand cars is booming, with demand for used vehicles consistently outpacing new car sales. According to WesBank’ s Business Intelligence data for the first half of 2024, applications for pre-owned cars are running more than 2:1 ahead of new car applications. While the appeal of pre-loved cars is undeniable, especially given the potential for significant savings, it is essential for buyers to fully understand the risks involved before making a purchase. These risks can be mitigated with the right precautions.
RISKS OF BUYING A PRE-LOVED VEHICLE
While buying a second-hand car can offer excellent value, there are potential pitfalls that every buyer should be aware of. Carrying out diligent checks is vital to avoid unforeseen expenses and complications later.
First, consider the vehicle’ s history and condition. Not all used cars are in good shape; some may have had accidents, poor maintenance or hidden issues. Always ask for a full service history and, if possible, have a professional mechanic inspect the car before buying.
Be wary of odometer fraud, where mileage is tampered with to appear lower. Ensure the odometer reading matches service records and fits the car’ s age and condition.
Also, check for any outstanding debt on the vehicle, as this could lead to legal issues or repossession. Verify ownership and confirm there are no legal claims.
Make sure the car has not been stolen or cloned by verifying the vehicle identification number( VIN) and ownership details with the relevant authorities
Finally, second-hand cars are often sold“ as is” or voetstoots without warranty or after-sales support. Be prepared to take on the responsibility for repairs and maintenance, which could be a significant cost depending on the car’ s age and condition.
THE VALUE OF VEHICLE ASSESSMENT REPORTS
Many buyers rely on vehicle assessment reports to determine a car’ s condition.
While these reports provide helpful insights, they do not always paint a complete picture, particularly regarding repair history. To avoid any unpleasant surprises, it is essential to request all available documentation from the seller.
In addition, consult with your insurer to understand any potential cover limitations. Some risks may not be automatically covered under standard policies and it is important to ensure your insurance policy will fully protect you.
INSURANCE CONSIDERATIONS
Insuring a second-hand vehicle is just as important as insuring a new one. However, the insurance landscape for used cars can vary, with different costs, cover options and requirements.
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