Answer
Mar 08, 2018 - 05:50 PM
Hello there
The usual formula used to calculate monthly repayment on a car uses the rule of thumb that a car payment shouldn't exceed roughly 1/3 of your disposable income (the money left over after paying tax, housing, utilities, phone bill and food).
Thus, to pay R3500 a month on a car, your disposable income would have to be in the region of R10 500 per month, although that doesn't take insurance and fuel costs into consideration. Once these additional expenses are factored in, you'd need to have about R12 000 left over after your living expenses and taxes are taken into consideration.
If you earn R6000 per month after tax, and (hypothetically speaking) you can live (pay rent, eat and pay your cell phone) on R2500 per month, your maximum allowable instalment drops to R1200 per month, which should get you a car with a trade value of around R55 000. Use this finance calculator to determine what you can afford: https://www.mfc.co.za/budget-calculator
Hope this helps!
The AutoTrader Team
The usual formula used to calculate monthly repayment on a car uses the rule of thumb that a car payment shouldn't exceed roughly 1/3 of your disposable income (the money left over after paying tax, housing, utilities, phone bill and food).
Thus, to pay R3500 a month on a car, your disposable income would have to be in the region of R10 500 per month, although that doesn't take insurance and fuel costs into consideration. Once these additional expenses are factored in, you'd need to have about R12 000 left over after your living expenses and taxes are taken into consideration.
If you earn R6000 per month after tax, and (hypothetically speaking) you can live (pay rent, eat and pay your cell phone) on R2500 per month, your maximum allowable instalment drops to R1200 per month, which should get you a car with a trade value of around R55 000. Use this finance calculator to determine what you can afford: https://www.mfc.co.za/budget-calculator
Hope this helps!
The AutoTrader Team
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