Foreign-used vs Locally-used Car? 8 Things to Consider

The Kenyan car market is mostly a second-hand one. Most Kenyans prefer cheaper locally-used or foreign-used rides to new, more expensive cars. Used vehicles from Japan are especially popular among Kenyans. 

When you are buying a foreign-used car, you can either import the car yourself, use the services of an importation agent, or buy a foreign-used car from a local yard. Imported cars must be less than 8 years from the date of manufacture and most Kenyans import cars that are nearing the 8-year import ban mark. So, for example, a majority of the vehicles imported this year are 2015 models. 

There are benefits to buying either a foreign-used or a locally-used car. Whichever option you choose, you'll probably be looking for a good balance between price, desired features, longevity, reliability, and aspects like financing and resale. 

Here are eight factors to consider when deciding whether to buy a locally-used or foreign-used car.

1. Cost 

High shipping costs caused by inflation and the reduced supply of foreign-used cars have led to the skyrocketing of foreign-used car prices. Locally-used cars are also increasing in prices due to high demand as a result of import shortages. Even low-end models like the Vitz and Mazda are going for almost 30% more compared to March 2022 prices, surpassing the Ksh1 million mark. 

Compare the costs of buying a locally-used vs a foreign-used car to determine which option will fit your budget. At the same time, it’s important to weigh in other elements like car reliability, specs, insurability, and resale value before you make a decision to ensure you get value for money. 

2. Car Specifications

Buying a car is a huge investment, so you’ll probably be concerned about getting a car that has your preferred specifications like colour, age, accessories, and mileage. If you cannot find your choice car among the locally-used ones or foreign-used ones in local yards, you may consider importing.

Apart from Japan, there are several other countries where you can look, including Singapore, Europe, England, South Africa, and the United Arab Emirates (UAE). Kenyans are also increasingly importing cars from Canada, Slovakia, and Mexico.

3. Running Costs

A car comes with lots of additional costs. Running costs such as car maintenance and servicing vary depending on the type of car you're using. 

A car driven on Kenyan roads is likely to have undergone more wear and tear than a foreign-used car that’s driven on typically better maintained roads abroad. You could end up spending more on repairs and maintenance when you buy a locally-used car, especially those with high mileage. Your running costs will depend on factors like car age, mileage and history of use. 

On the other hand, an imported car's grading score will tell you a lot about its mechanical condition which will affect its running costs. Check the car's documentation, especially its maintenance records.

Here’s a quick guide to auction grades, according to Car Web:

• Grade 5: Showroom condition, all original body parts, low mileage.
• Grade 4.5: Excellent condition. Maybe some small marks.
• Grade 4: Good condition, some scratches, and dents from normal use.
• Grade 3.5: Average condition with scratches and dents visible
• Grade 3: Scratches and dents, worn components, chance of rust.
• Grade 2: Badly corroded, damaged or modified.
• Grade 1: Not far away from being scrap, or heavily modified.
• Grade RA or A1: Has been in a minor accident. Repaired to a good standard.
• Grade R or A: Has been in an accident and had some parts repaired or replaced.

A car that has been regularly maintained is unlikely to have major running issues. Hire a professional to do a thorough mechanical checkup on a car to be sure that it's in great condition.  

4. Resale Value

Consider a car's resale value if you plan on reselling it. The most important factors that determine a car's resale value are its popularity, car specs, reliability, fuel efficiency and maintenance costs. 

High-mileage locally-used cars may have less resale value than foreign-used cars as they experience more wear and tear on the poorly-maintained Kenyan roads. Foreign-used cars with higher specs and more accessories are also likely to fetch better resale value than basic local models.

However, older locally-used car models which are popular, reliable, and easy to maintain like the Toyota Vitz and Corolla are likely to continue to be more valuable in the future, fetching better resale value than some newer, foreign-used cars.

5. Fitness For Kenyan Roads

Some foreign-used vehicles will work perfectly, others will suffer minor problems while some will fail. Foreign-used from the Arctic and Antarctic markets have major mechanical differences from those of a tropical country like Kenya. 

For instance, a foreign-used car with snowflake tyres is likely to undergo a high level of degradation on Kenyan roads, increasing the likelihood of a tyre burst and road accident. A locally-used one is probably already customised and safer to drive. 

You have to calculate the possible additional cost you may incur to customise your car for local roads including costs associated with improving the ground clearance. 

6. Car Age Restrictions

While there are no restrictions on the age of a car you can own in Kenya, you can only import a car that’s less than 8 years old from its date of manufacture. 

If the vehicle you want to import is more than 8 years old, you may have to find a newer foreign-used vehicle, which can be costlier to import depending on the model. 

Alternatively, you can buy a foreign-used car from a local yard or a locally-used car which limits your car options. 

7. Financing

Most local institutions finance cars that are already in the country. There too are many lenders that are willing to offer import financing.  

You'll also need to keep up with much more documentation when you're financing an import car such as all import documents and proof of payment of import duty which can be a strenuous process. 

There are, however, import agents who will take care of the entire importation process including your import paperwork, which means more costs for you but less stress. 

8. Insurance

You’re likely to pay higher insurance premiums for a car if:

• You have a high-spec vehicle with top-notch features
• If your car has to be modified to meet local standards
• You have a high-maintenance car with rare or expensive spare parts

More foreign-used than locally-used cars fall under the above categories but this is entire based on the choice of vehicle you make. Some locally-used cars also have their insurance shortcomings including: 

• Some locally-used cars become very expensive to maintain once they hit high mileage due to frequent breakdowns, like some newer Volvo models and some other high-end vehicles like BMW and Audi. Insurance companies may either be a little hesitant to approve comprehensive covers or charge much higher premiums than comparable alternatives.
• Buying a 10 to 12-year-old locally-used car puts you at risk of not getting insurance. Currently, insurers in Kenya are unwilling to insure motor vehicles older than 10-12 years or those that have a value of less than Kshs600,000. While their decision to deny such insurance has been suspended by the court until February 2023, there's no telling what the future hold

Some insurers will also charge higher premiums for low-end cars, arguing that high-value cars present lesser risk than low-end cars. 
For instance, you may pay more insurance premiums in terms of the percentage of value of the car for a Vitz worth Ksh1 million as compared to a Prado worth in the upwards of  Ksh5 million. For a vehicle valued at less than Ksh1 million or thereabout, you could be charged as high as 5% of the value of the car as compared to vehicles with values higher than Ksh5 million whose premiums could be as low as 3% of the insured value of the car. 

Consider how insurance costs affect your monthly budget and your overall car costs before you buy a car. Also important is the level of difficulty in getting approved for a comprehensive cover. 

WRAPPING UP

When you're deciding whether to go locally-used or foreign-used, weighing in all the above factors can help you save on car costs and obtain a reliable car that will last you a long time. 

If you are planning to finance your car purchase, Money254 gives you access to a financing comparison tool that helps you match your financial needs for both locally-used and foreign-used cars. Check out the range of auto loans available in Kenya today.