People are often surprised to hear that a dealership's financing and insurance (F&I) department, or "business office," is a profit center.
Reality check No. 2 Everything car dealerships sell you represents a profit opportunity. With few exceptions, the car dealer is a middleman. In the case of a new car itself, you can't eliminate the middleman. Most state franchise laws prohibit manufacturers from selling directly. But you can eliminate the dealer with regard to financing and insurance if you determine that it's in your best interest.
With the widespread availability of invoice pricing, it's harder for dealers to squeeze margin out of the new-car transaction. Much of the profit has shifted to the "back end," which includes the F&I department. The F&I department is also where many buyers let their guard down and squander any good negotiating they've done for the vehicle's purchase price.
You have various options for financing a vehicle, including credit unions, banks and dealerships. In some cases, the loan you'd get from a dealer comes from the same bank you could go to yourself. Dealers play the part of loan agent in trying to get you the best rate, but they can and do add percentage points to the rates they obtain from lenders. In many cases, they split the additional profit margin with the lender, so everyone wins &mdash except you. Though its ethics are in question and consumers have sued dealers over it, this practice isn't currently illegal. Some day regulations such as the Truth in Leasing Act may be enacted to require disclosure of loan rates.
However, since many captive car financing companies offer discounted loan rates, it's possible to get the best deal by financing at the car dealership. Shopping during an incentives period increases your chances for these savings.
In addition to loans and leases, dealerships often offer health, disability and other insurance plans. Some buyers appreciate the opportunity to make all their deals under one roof, but you should look into third-party sources and shop around before choosing an insurance plan.
Back-End Products and Services
The F&I manager is also responsible for selling additional products and services, which are a significant source of dealer profit. They include
Service contracts Often referred to as extended warranties, these plans are meant to take over when the manufacturer's warranty runs out and/or cover repairs not accounted for in the manufacturer's warranty. Consider your needs carefully before purchasing a service contract for a new car. While the cost of new cars has risen, so has their reliability. The period between purchase and major scheduled service is longer than ever. And experts say the parts of a car that are most likely to break after the factory warranty expires are typically not covered by third-party service contracts, though there are exceptions, such as four-wheel-drive systems and turbochargers. If you consider a service contract, bear these issues in mind
&bull    Some contracts have deductibles, and some do not. Amounts vary, and you may have to pay a deductible for each claim or even individually for unrelated repairs in the same claim. Get the details.
&bull    Don't assume your contract will transfer to another dealer if you move. And if it can be transferred, is there a fee?
&bull    The contract also may not transfer to another owner. An extended warranty is a nice selling point &mdash but not if it's tied to you rather than the vehicle. Check for owner transfer fees.
&bull    Sometimes one of a car's parts or systems will be responsible for damage to another part of the car. The best example of this is a timing belt. In certain engine designs, when this part breaks it causes catastrophic (and very expensive) valve damage. A timing belt may cost R300, which will the service plan cover? Some service contracts stipulate that the insured cannot collect for damage to a part covered by the plan if it was caused by an uncovered part, negligence or some other hard-to-define condition.
&bull    If you're financing for a longer term, say five or even six years, check the mileage limitations of the extended warranty. It's possible you could surpass the mileage limit, thereby voiding the warranty, before the financing period ends.
Service contracts represent a significant profit source for dealers, so expect the hard sell. The price and all the terms above are negotiable, and again, you can comparison shop the service plan at multiple dealerships even if you're not buying the car there.
Rustproofing and paint protection All new cars are built with rust-resistant galvanized steel (or aluminum or fiberglass) and treated with a rustproofing agent at the factory. Experts say dealer-applied rustproofing is unnecessary, at best. Paint "sealant" is a similar story factory paint is sealed and durable and can be protected effectively with a coat of wax you apply yourself.
Fabric protectant Unlike rustproofing, fabric protectant can be applied effectively after the car is fully assembled, which means the dealer can do it &mdash and so can you. If you take the time and have the knack for it, you can achieve the same result.
Vehicle repair is big business. Thanks to the complexity of modern vehicles, dealer service departments are guaranteed a steady flow of business that might otherwise go to independent repair shops.
In terms of the dealership's bottom line, the service department can contribute a healthy percentage of the profit. It explains why dealers are sometimes willing to sell at extremely thin profit margins.
If you come in with an immaculate trade-in and meticulous maintenance and repair records, then the dealer may intuit that you're good for a few years of regular service and give you a good deal on the purchase price itself.
For quality new, used and demo cars, visit www.imperialselect.co.za.
If you are in the market for a previously owned vehicle, there are many extra things you should check out in order to make an informed and responsible decision. Used cars obviously come with a history and for the most part, you won&rsquot ever know all the details about where it travelled and who owned it in the past. For maximum security and peace of mind, you can request to see a full history report on the car.
Whether you are looking at buying from a dealership or private seller, you are fully entitled to the background information of the car as you will be taking over responsibility for it if you buy it &ndash and this could potentially be a very costly decision if the car turns out to have been stolen or involved in any other illicit activities, not to mention the risk of buying a car that is clearly not likely to last you very long due to previous accidents or engine failures.
Every cars entire history is officially recorded based on its engines VIN number &ndash this number is used to track where the car goes from first sale all the way to the point where it is written off as scrap. The information provided on a cars history report can vary, but you may be able to find out several extra details about the car, including
This information will be very useful if you know what to check when reading the report. Here are a few things to look out for
Many New Owners In A Short Span Of Time
If the report shows that the car has moved from owner to new owner a few times in a matter of a few years or even months, it&rsquos a big warning sign. Chances are good that there is something very faulty with the vehicle, that either cant be repaired or would cost far more than the actual value of the vehicle to correct. Conversely, if you see the car has only had one or two previous owners in its history, consider it a positive sign.
Check For A Recent Emissions Testing Report
With changes in global policy concerning the legal limit of carbon emissions a vehicle can produce in order to be roadworthy, you need to make sure that the car has undergone an emissions test and has passed. In some regions, it is not only illegal for you to drive a car that fails this test, but it is also illegal for someone to sell it to you.
Check If The Car Has Lived In Coastal Regions
Something often overlooked when checking out a used vehicle is where it was parked and where the owner lived. This is important because if the car spent years in a coastal town or city, the salt content in the air will have caused additional corrosion and damage to the vehicle. If you&rsquore still willing to take on the car if it has been near the ocean for many years, be prepared to take on additional costs for maintenance and corrections if the previous owner did not get rust protection for the car in the past.
Cross Examine Private Sellers
There are many risks involved with buying from a private seller. You wont have any fall back if anything goes wrong with the car after you have bought it and most sellers will not be willing to assist you once they have got their payment. Another big issue to look out for is to check whether the seller is actually who they say they are. There is always a risk that the car may not belong to them or that it has been stolen. Ask them as many questions as you need to be completely reassured that they are legitimate. Some of the questions you should ask are how long they&rsquove had the car, was there ever an issue with the battery, which components gave trouble or had to be replaced in the time that they had the car. They should be able to comfortably answer any of these questions. In addition, double-check the report to validate that they are in fact the last owner of the car.
Check The Odometer Reports
Quite often sellers will roll back the odometer of the car to make it look like its travelled far fewer kilometres than it actually has. The history report should have logs of odometer readings over the years, typically logged whenever the cars licence is renewed or whenever the car was sold off. If the numbers dont add up to the current reading, there may well be more than just a false odometer reading to be worried about.
While it may be a time-consuming job to go through all of these checks of a used cars service history, we strongly recommend you take a bit of time now to be sure, to avoid having to take a lot of time in future to deal with oversights you had when buying the used car.
If you have ever taken a look at the price boards at petrol stations, you&rsquove probably noticed the variety of fuels available and how they range in price. Unless your vehicle has a diesel engine, you have got a choice between 93 and 95 unleaded. Most of the time you wont be asked which you prefer and we will explain why in a moment. There is always a price difference between these two, with 95 always being a bit more expensive per litre than the 93 type. If you have ever wondered why that is, or why we even need two different types of unleaded petrol at all, read on.
It&rsquos All About Performance
Although there are many different makes and models of used cars, for this analysis there are only two types regular, everyday cars, and supercars. For most cars, performance requirements dont vary too much but a supercar or a turbo not only gulps up a lot of petrol, it also needs a higher quality of petrol to perform at its best. If you drive a sedan, a hatchback or any standard car, 93 octane petrol will work perfectly. Should you own a veritable speed demon, however, you&rsquoll need to fill up with 95 octane.
What Happens If I Fill Up With The Wrong One?
Nothing, really. Your car will still run and it wont destroy the engine or do something terrible that requires repairs at a reputable car repair workshop. If your car runs on 93 and you filled up with 95, the only harm would be to your bank account as 95 is costlier. On the plus side, 95 fuel will give you better mileage than 93 if you drive a regular car. If you have a supercar and fill up with 93, you&rsquoll find your car underperforms as the fuel quality isnt quite as good. Again, there wont be any permanent damage. If you want to be completely sure what petrol you need, check your cars handbook.
While the general rule is that you wont need better than 93 octane, where you live or the environment in which you are driving impacts your cars performance. Factors such as environmental conditions (like the weather) and the altitude you are driving at may mean that a different octane petrol could be more beneficial. We hope this knowledge will help you save a few extra Rands when you fill up your used car from now on &ndash happy driving!
From time to time the unexpected happens in life and its no different when it comes to owning and driving a car. Luckily there are ways to be better prepared for those moments when circumstances are not in your favour and you feel like it&rsquos just not your day. We are here to cover three of the many essentials for a car emergency kit to always have in your used car so that the next time will be as painless and simple as possible to get through.
Being stranded on the side of the road when a tyre fails you is never pleasant but it would be even more of a headache if you didnt have a spare wheel to swop it with. Most new vehicles come standard with an extra wheel for emergencies but if your car doesnt have one or yours isnt in usable condition at the moment, make it a priority to get a backup spare. Making sure its always ready to use is also important, so check if the tyre is still properly inflated and that the tread on the tyre is in good condition.
Whether your car battery is getting a bit old and unreliable or if maybe you forgot your lights on and headed out on a long shopping excursion, there will be times when your car just wont start all of a sudden. Its a frustrating experience and can instantly leave you feeling like you are stranded alone on a tiny island in the middle of nowhere. Luckily, jumper cables can help to resolve the problem fairly quickly, with the help of a friendly bystander to help give your car the boost it needs. Jumper cables dont come standard when you buy a new car but should be one of the first purchases you make as an essential add-on to your car emergency kit. Whether it&rsquos you, your co-worker, neighbour or a random stranger who finds themselves in need of help, jumper cables will be a very appreciated lifesaver in a tight spot.
Having a 'go bag' with anything you may need in case of an emergency is always a good idea. Put together or buy a medical kit so that you have what&rsquos needed in case of injuries or just a headache. Once that is sorted out, add extras like a raincoat, flashlight, extra batteries, a few bottles of water, some energy bars and an extra charger cable for your phone or power bank.
With these three essentials loaded and ready for use wherever you go, you will drive around with a lot more peace of mind about those 'what if' situations. Remember to always check on all of these items before you head out on a longer trip or holiday break in your used car, as it tends to be even harder to sort out a situation when you&rsquore nowhere near home.
You know the spot check you do before you leave the house or work, just to be sure you&rsquove got everything? Wallet, phone, car keys. We tend to be so preoccupied with daily life that we forget the same spot check should be done on the cars we drive around in all the time, to be sure that everything is still looking and working as it should. A big part of that routine check should be your used cars&rsquo tyres &ndash after all, those bands of rubber are what keep you on the road safely. Incidentally, the advice in this blog could be applied as a tip for test driving a used car as well.
To help you out, we&rsquove put together a simple list that you can use in your tyre check routine to make sure they&rsquore in good shape and that the check becomes second nature each time you need to do it
Keep your tires properly inflated
The wrong air pressure can wreak havoc with the control you have over your car and can make the chances of blowouts or premature wear and tear a lot bigger. Do a weekly check when you fill up with petrol.
Have your tyres rotated from time to time
And without being funny, we&rsquore not talking about keeping them turning. Instead, rotating your tyres refers to changing their position on your car from time to time. Front tyres being moved to the back and vice versa. This will help keep your tread evenly distributed, especially if you didn&rsquot replace the entire set at the same time.
Keep to the same brand of tyre when it&rsquos time for a new set
A car with different tyres can badly affect your car&rsquos handling and make the car unbalanced, all of which are safety concerns.
Inspect your tires often
Look out for any odd bubbles, changes in the shape of the tyre or signs of cuts or objects that may have become stuck in the tyre. If you come across anything suspicious, take the tyre to a service specialist as driving any further with it could be very dangerous.
Always carry a spare tyre
From time to time you may run into a tight spot and you don&rsquot want to be stranded on the side of the road with no backup plan. Keep a spare wheel with a tyre that is still in good condition and remember to check that the tyre is still properly inflated every so often.
These few simple checks and good maintenance habits will not only save you money and help your tyres to last longer, but it will also give you peace of mind that you&rsquore driving around safely.
As always, if you&rsquore looking for some help with maintaining your car, stop by one of our car repair workshops anytime and let our team of pros give you a hand.
Over the past few years Kia has steadily gained a strong foothold and is still growing in popularity with the South African consumer market, and for good reason. Aside from the affordability of their vehicles, they offer high-end features, an outstanding seven-year warranty and consistently rank as one of the most reliable luxury car brands in the world - all of which make for a winning combination in terms of what most South Africans are looking for in a vehicle.
Not many know much about the brand&rsquos origin story and how they came to be a leading car manufacturer, though. Here&rsquos the breakdown and a quick history lesson, so you can offer a few interesting and fairly unknown facts about KIA the reliable car brand at your next social gathering.
The Formative Years
Kia, at least as we know it today as a car brand, only came into existence in the 1970s. Their actual origin was rooted in the bicycle manufacturing sector, where they initially produced bike parts under the name Kyungsung Precision Industry in 1944. The Korean company renamed itself &lsquoKia&rsquo in 1951 when they began to produce bicycles from start to finish and spent the next few decades gradually increasing their scale by also getting into manufacturing motorbikes and trucks.
In 1973 they launched their first auto assembly plant and their very first car, the Brisa, was introduced to the world in 1974. Truck production was still their main feature though, and they caught the attention and interest of Ford. In 1986 they formed a partnership with Ford to collaboratively manufacture trucks on a massive production scale which saw their vehicle count skyrocketing to 95 000 trucks on the road in 1987 &ndash a mere year later.
Breaking New Ground
Thanks to their partnership with Ford - an American brand by origin - Kia got a foothold in the American market and opened their first standalone dealerships in the US in 1992. They rapidly gained popularity and expanded to feature dealerships across 50 states by 1995, hardly three years after their first dealership launched. Things were looking promising for Kia, but then the Asian financial crisis happened in 1997 and the company buckled under the immense pressures brought about by this economic meltdown. Hyundai stepped in to save the company by taking it over with a 51% share ownership. Over the next few years, shares were divided and eventually, to date, Hyundai now holds a 33% share in the company.
Over the next several years Kia steadily regained its strength as a manufacturer and began to work on growing in the European market. In 2014 the brand got a huge exposure boost when Pope Francis was seen transported in one of their Soul models and from then their reputation steadily grew on a global scale. Their first few years as a new entrant on the car market saw them struggling to be taken seriously by those in the automotive industry, with them featuring at the lower end of dependability and other rated lists. Their turnaround truly came when they focused heavily on quality and excellence that would set them apart. Over the years they rose to the top handful of brands ranked for reliability and have consistently remained there. Another huge aspect they became associated with is their striking design aesthetic and the quality of their infotainment systems, which rivalled even upper-end luxury brand vehicles. Driving around in a Kia has gone from being a matter of &lsquonever my first choice but I need a car&rsquo to now being a preferred and trusted brand among consumers who demand excellence and appeal in terms of associated social status.
A Few Lesser-Known Facts About Kia
Interested in learning more about one of the most reliable luxury car brands in South Africa?
Get in touch and lets get you behind the wheel of a used Kia vehicle today.