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Is It a Good Idea to Buy a Locally-Used Car? 
Money Management

Is It a Good Idea to Buy a Locally-Used Car? 

Many people associate locally-used cars with low quality because of bad driving habits of many Kenyan drivers, relatively higher mileage and poorly-maintained roads that accelerate wear and tear. 

You can still find good quality locally-used cars since many owners do not always sell their vehicles because they are flawed. Some sell to upgrade, others may be looking for some quick cash to escape a financial crisis, among other reasons.

There are instances when buying a locally-used car makes sense and other times when you may want to think twice. Here are a few reasons why you may or may not want to buy a locally-used car. 

When Buying a Locally-used Car Is a Good Idea

1. When you're buying a reliable car with a high resale value

Car resale value and reliability are two essential factors most people consider highly when you're buying any car. Maintenance costs can easily increase when you use Kenyan roads regularly especially if you're driving a car that has been on the road for quite a while.  

It’s best to go for a car that is easy to maintain, a model that has a history of rarely breaking down, and has easily available and cheap parts.

There are plenty of resilient models in the Kenyan market that you can get cheaply. Nearly all existing Toyota models have a good reliability reputation, but others such Mazdas and a little older Nissans, Fords etc. also have a good reputation. 

You must, however, never go for pedestrian reviews of reliability and rather consult an experienced car dealer or consultant. The reliability claims can also drive the sale cost of used cars quite high which has led many to label some models as ‘overrated’. 

Take your time to do your research and even if you are buying the most reliable of models, the exact unit you are buying has to be thoroughly inspected. 

2. To avoid rising importation costs

Foreign-used cars have become more expensive as inflation rises and the government continues to charge punitive fees on imported cars. 

Vehicle imports are subject to 25% import duties, 20% excise duties, and 16% VAT. There are also freight charges (CIF), import declaration fees of 2%, and a railway development levy of 1.5%. On the other hand, local automobile assemblers like DT Dobie and Simba Corp are exempt from the 25% import charge.

A foreign-used vehicle may end up costing you double its original price considering these taxes. Faced with these costs, many people are now turning to cheaper, locally-used cars. 

But don’t let the mere mention of taxes put you off, you have to consider many other factors including the proportionate price difference for a lower mileage unit, the fuel efficiency of the alternatives, your actual reasons for purchasing a vehicle and whether going for a locally used option will match these objectives. 

3. Access to more financing options

Some lenders may prefer to finance a car that's already in the country as it is less hectic. Import financing tends to be riskier as there's a possibility of the car being delayed for a long time or arriving in the wrong condition, resulting in potential losses for the financing institution if you have used the car as collateral. 

But you'll still find many import financing lenders who also double up as importation agents, helping you through the entire importation process from shipping, right through delivery to your desired location.

4. You get your car faster

You can get a locally-used car as soon as you need to, especially if you are paying in cash. All you have to do is walk into a dealership, choose a car, get a qualified mechanic to conduct the necessary inspections which can take less than two hours, test drive, pay for your car and drive away.

Unless you're buying a foreign-used car from a local yard, importing a foreign-used car requires lots of patience and can sometimes take upwards of two months if you encounter shipping problems.

It can be a huge inconvenience especially for a business vehicle to have your money tied up for months if you are buying in cash. In case you are financing your import, you will still need to pay back the money should anything go wrong with the import.  

If speed is of importance to you, then a locally used vehicle may be a good option. But a foreign-used vehicle that is already at a yard in the country could still work since the only difference is the fact that it is imported. 

But really, no one exactly purchases a vehicle as an emergency. You could always hire an alternative as you wait for your unit to be shipped. For vehicles to be used for commercial purposes, speed may be an important factor. 

5. You can test a car before buying and lower the risk of fraud

Several fraud cases have occurred involving the importation of cars from Asian countries, including Japan. Buyers send money to alleged sellers overseas only to discover they have been scammed. Importing a car requires extra care.

You can contact the Kenyan office of Japan External Trade Organisation (Jetro) for a list of all Japanese companies involved in the exportation of used motor vehicles to ensure you are making a legitimate import from Japan. 

The Japan Used Motor Vehicle Exporters Association (Jumvea) has also been pushing its members to use the Jumvea safe trade system, a network of about 400 Japanese used-car importers which eliminates the risk of falling victim to scammers. 

You can view, inspect, and test-drive a locally-used car before you buy which reduces the risk of fraud. 

6. There are no car age restrictions for locally-used cars

There is no age restriction to the car you can drive in Kenya, which means you can get a very old model, even those that are at least 15 years old, at a price within your budget. 

It's illegal to import a foreign-used car that's older than 8 years since the date of manufacture, which can limit your options. You may have to settle for a newer, more expensive car of your preferred model or opt for another model that's within your budget. You can also go for foreign-used cars sold in local yards. 
Thinking about age, you could get used vehicles in good condition for as low as Ksh150,000, get a ‘ project car’ for even less and restore it to mint condition etc. if this is something that appeals to you.

When Buying a Locally-used Car May Not Be a Good Idea

1. When you’re buying a very old car, 10+ years

There are some lenders who won't finance cars older than 8 years. These lenders consider these older vehicles risky to finance since they are more likely to encounter mechanical issues and attract high repossession rates. 

Insurance companies may also have their car age limits. Some companies will not insure cars that are 10 to 12 years old. There could also be insurance limits relating to the value of the car as well. Insurers may refuse to cover vehicles worth less than Ksh500,000 or Ksh600,000, or you may have to pay higher premiums to cover the risks. 

2. When it is a high-mileage car

A car that has done many kilometres on Kenyan roads is likely to have undergone lots of wear and tear, reducing its overall value and reliability. The higher the mileage on a car, the more likely it will need lots of repair and maintenance.

To find out the mileage that a car has covered on Kenyan roads, compare its import mileage to the current mileage.

You can get the mileage of the car at import by keying in the chassis number of the car on the QISJP website for Japan car inspection. Find your car's chassis number by first locating its vehicle identification number (VIN), which is usually affixed to the drivers-side door jamb or on the lower-left corner of the dashboard. The last six digits of the VIN is the chassis number. 

The difference between the current mileage on the car’s dashboard and the mileage at import will give you the exact mileage that the car has covered on Kenyan roads. 

According to motoring experts, a car is likely to cover between 10,000 and 40,000 kilometres a year. A lower mileage is often preferable for a locally-used car. Be careful with cars that have suspiciously low mileage as some sellers alter odometer readings. 

Improve your chances of buying a better quality vehicle if you have documentation regarding the car's manufacturing date, purchase date, and repairs and maintenance history. 

3. If it's a locally-used car that’s expensive to maintain 

Some locally-used cars have very attractive pricing but are a hassle to maintain due to expensive spare parts.

Some Volvo brands such as the Volvo v40 and s60 with a fuel capacity of below 2000cc come with seals and engine mountings that can cost more than 2-3X compared to other car brands. These cars are best bought foreign-used with low mileage, as locally-used versions with higher mileage may cost you tens or hundreds of thousands in routine maintenance. 

Some cars known for speed and class also do not do very well on maintenance and cost-effectiveness when bought locally-used with high mileages, like some Audi and BMW models. 

Do Your Homework Before Buying a Locally-used Ca

Buying a locally-used car comes with its downsides and benefits. 

You can get locally-used cars at cheaper prices, especially now that import and shipping costs have increased the prices of foreign-used cars. But don't fall prey to the lower cost trap. Before you buy a car, inspect it thoroughly and consider the cost of running and maintaining it. 

If you need financing to buy a locally-used car, Money254 connects you to lenders that match your car and budget needs. Compare auto loans available in Kenya today.

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Nyawira is an experienced content specialist, finance and investment writer. You can connect with Nyawira on LinkedIn.

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