Choosing a vehicle can be an exciting prospect. However, many aspects go into selecting the right car for you. One of the most important factors is the affordability of the said vehicle. And even when considering the affordability, there is more than just the repayment to the financier to consider.
So before you sell your car quickly and easily with our simple and intuitive tools here, and start your search for a new or used car on AutoTrader here. Let us first look at what car you should be looking at based on your salary.
Related: How much do you need to earn in order to afford a new car?
Car affordability: Rule of thumb
It has been said that you shouldn't spend more than 20% of your net salary on a monthly vehicle repayment. Not only because it is a good rule of thumb, but in many cases, a bank or money lender won't approve your vehicle finance application if this ratio is any larger than that.
This is to ensure that you have enough money left to pay for rent or a bond, medical aid, and your usual living expenses such as food, clothes, phone, etc. It also ensures that you have enough money to pay for the mandatory car insurance required by money lenders for the entire duration of the finance agreement. Why? This is so the financier can protect their investment and know that the fees will be paid should anything happen to the vehicle.
So what car can I afford on my salary?
In the table below, we use that rule of thumb to give an estimated value of a prospective vehicle within your means, depending on your income. Remember that these are just estimates and that your personal situation and credit score will greatly affect whether you will qualify for vehicle finance.
| Monthly Salary | Monthly Installment | Vehicle Price |
| R10 000 | R2 000 | Less than R100 000 |
| R20 000 | R4 000 | Less than R200 000 |
| R30 000 | R6 000 | Less than R300 000 |
| R40 000 | R8 000 | Less than R400 000 |
| R50 000 | R10 000 | Less than R500 000 |
| R60 000 | R12 000 | Less than R600 000 |
| R70 000 | R14 000 | Less than R700 000 |
| R80 000 | R16 000 | Less than R800 000 |
| R90 000 | R18 000 | Less than R900 000 |
| R100 000 | R20 000 | Less than R1000 000 |
*Note that the figures in the table above merely serve as an estimate and are not financial advice. An individual qualification for a vehicle finance agreement will differ based on personal credit scores and financial commitments.
Related: What credit score is needed for car finance in South Africa
Costs to consider before financing a vehicle
Before you choose a car you think will suit your budget, here are a few costs of vehicle ownership to consider first.
Vehicle Insurance
If you are planning to enter into a vehicle finance agreement with a lender, do note that the financier will require you, the vehicle user, to fully insure the car for the full duration of the finance agreement. And this means additional monthly costs. Your particular monthly premium on insurance will greatly be affected by factors such as the vehicle, the value of the vehicle, the colour of the vehicle, the age of the driver, the area of residence, etc.
Related: What colour cars are cheaper to insure?
Car service and maintenance
While many new cars will come with a warranty and some sort of service plan, not all do. And sometimes, the more affordable options have shorter terms for a service plan. Thus, you will either need to start paying for services out of pocket or take out an extended service plan on the vehicle, which could cost a pretty penny.
Related: Who is eligible for car finance?
Fuel and wear items
While sure, your budget might have included the monthly vehicle repayment or even the mandatory insurance, but did you budget for fuel and other running costs? Fuel is getting more expensive by the day and is something to consider before purchasing a car. Furthermore, a car has many wear and tear items such as tyres, brakes, clutches, bearings and shock absorbers that aren't always covered in service plans. Saving a few hundred Rand a month for future replacement of these types of items is smart but once again, goes into your monthly budget.
Related: How to apply for car finance at the dealership
Cost saving tips
Save for a deposit
Before even considering what car you should purchase, it is a good idea to find a way to either save up for a large deposit or even sell your current car. The larger the deposit you can put down, the less the principal loan amount is, and ultimately, the lower your monthly repayment. This can either assist you with having lower monthly expenses or get you into a higher specified or newer model with an instalment you can afford.
Related: Do I have to pay a deposit on a car?
Purchase a cheaper car than you can afford
Sure, you might have done the sums and figured out just how much you can pay per month for a car. But as we all know, living costs and fuel prices are always rising. As such, purchasing a vehicle below your budget is a better idea. That way, should your other living expenses climb, you are sure that you can still afford the car you purchased and don't default on the loan.
Related: Car finance options explained: car leasing
