Buying a second-hand car

Buying a car can be one of the biggest expenses outside of a house. What many people don't understand is that unless they are buying a real investment car, such as a rare Bugatti, a new car will depreciate by as much as 20 percent as they drive it off the showroom floor.

Buying a six-month-old vehicle is a much better deal, and you still get the advantage of the motor plan. There are some basic rules to follow, though.

1. If it turns out that your second-hand car is a stolen vehicle, and you have an accident, your insurance policy will not pay out and you will probably lose your car, along with the hard earned cash you paid for it. By conducting simple background checks, prior to purchase, you can ensure that you aren't left out-of-pocket.

Caroline da Silva, head of portfolio management at Santam, South Africa’s largest short term insurer says, "Exactly 17 014 cars were stolen off SA roads last year, which makes the likelihood of you ending up with a stolen vehicle all the more real – whether you are buying through a dealer or not."

2. A reputable car dealer will go to great lengths to ensure the cars they sell are fit for purchase in every respect. However, not all car dealers are reputable, and the private sale of vehicles leavesawide gap for criminals to get in on the act.

3. "By calling your local police station with the registration number, engine and chassis number–which all appear on the car’s licence disc – you will quickly and easily be able to establish whether the car you are planning to buy is stolen.

Da Silva explains, "Should the chassis and engine number not correspond, for example, it may indicate that the car was involved in a major accident, or again, that the car has been tampered with and contains stolen parts – in which case, following investigation, the car may be seized by the police."

4. Another peril to be aware of is that many second-hand cars have outstanding finance, which, if you purchase the car, you are liable to pay. So, it is crucial to ensure you have proof from the seller that all amounts owing have been settled before purchase.

One can always call the car owner's finance company directly if the proof provided looks suspect.