*** A valuable lesson learnt from the recent SATAWU strike

*** Discover how to chop up to 20% off your fuel costs…

*** Put an extra R1,000 in your pocket by making just 1 call… and more

From the pen of Karin Iten

Dear Investment Academy Reader,

It’s like Déjà-Vu all over again. The recent trade union worker SATAWU strike caused sheer panic for motorists wanting to get away for the Easter weekend. Why? Because petrol stations in Durban (and other major cities) were concerned about running into fuel delivery problems. This left many holiday-goers at the mercy of erratic petrol supplies at their nearest service stations.

Were these “shortages” exaggerated? Many news sources, like the Mail & Guardian believe so. As does the South African Petroleum Industry Association (Sapia), which said, “at worst, some service stations had temporarily run out of stocks of some grades of fuel”.

This got me thinking about ways you could make buying, owning and, even, running your car that much cheaper. So today, I’ve put together a few handy tips on how to do just this.

The first question is: Should you even buy a new car?

Everyone knows new cars shed value fast. It’s estimated the average car drops 20% in value when you drive it off the showroom floor and loses up to a third of its list price within the first three months after purchase. In fact, just a year after buying, an owner of a Fiat Grande Punto 1.2 Active, for example, will struggle to salvage 50% of the new price. That’s a huge price reduction – and it’s by no means the worst.

So what can you do about it? Well, many sceptics, like regular MoneyWeek contributor Tim Bennet, would say: “Don’t ever buy a new car.” And let’s be honest, he has a point.

Most people can’t actually afford to right now and, if you really think about it, it’s a wonder anyone ever does.

Why? Well, first there’s the depreciation factor, but that’s just the start of your problems. Unless you pay cash, you’ll also have to deal with financing costs on top of the already high price you’re paying. Not to mention the fact that a higher purchase price will significantly whack your insurance premiums up.

If your heart is, however, set on a new set of wheels, don’t forget to use the current slump in vehicle sales to your advantage. With buyers in such short supply right now, you should use every opportunity to leverage your status. So ask for those “optional extras” (that’s where dealers make a chunk of their money anyway) and haggle over price until the deal is perfect for you. This way, you get all the trimmings, without paying those extreme prices.

And then there’s the question of reliability…

These days, cars that are serviced regularly shouldn’t cause you any major problems – even after five years or more. Most manufacturers offer three-year warranties as standard – some even offer five years. So, if you’re worried, buy something that’s one or two years old and you’ll still be covered for a good stretch – even if something big goes wrong.

If you’re buying a car that’s outside its warranty period, or are nervous about accident damage, then have it comprehensively checked by the AA or your local mechanic. This should ensure any problems are detected long before you experience their effects – saving you hundreds, if not thousands, of rands in repair costs.

Save money by choosing the best option…

If you’re worried about saving money (and let’s face it, who isn’t?), then go for a petrol engine instead. The average diesel car costs R14,000 more than its petrol equivalent. So, if you’re tossing up a coin between the two, be kind to your pocket and go for the petrol option. Sure, the difference is fuel price is almost negligible, since diesel’s consume less fuel per kilometre despite the higher fuel cost, but the cost of servicing a diesel and the wear and tear on parts is far higher.

And speaking of fuel, you can chop up to 20% off your fuel costs by driving 100km per hour (in the slow lane of course) when you’re on the highway. And did you know, you can reduce your car’s average fuel consumption by up to 5% – saving you 45c a litre – by driving light. No, this doesn’t mean kicking your overweight uncle to the curb, instead ensure you car isn’t carrying unnecessary weight by emptying your boot and taking your roof rack off if you have one.

Don’t let sneaky insurance loopholes cost you a bundle

If you drive an older car, phone your insurance company and get them to adjust your premiums to take into account its current residual value. (They usually only do this on request, so you’re probably paying much more than you should.) Depending on the value of your car and when last your premiums were updated, you could save up to R1,000 a year.

And finally, remember, tyre problems account for 10% of all callouts. So check them regularly and save yourself thousands of rands in towing and new tyre fees.

Till next week, here's to your financial freedom…

Karin Iten
For the Investment Academy