What is the average cost of ownership for a budget-friendly car?

In South Africa, owning a car comes with a lot of costs after the initial purchase. This article looks at how much it costs each month to own a budget-friendly car, taking into account a number of factors that can have a big effect on your budget. To fully understand the financial side of owning a car, it's important to know about everything from loan payments to petrol prices and other unplanned costs.

To make smart financial decisions, you need to know how much it costs to own a car all together.

Calculating your car loan payments

Let's say you want to buy a budget-friendly hatchback for about R250,000.  To help you figure out your monthly loan payments, let's look at this example using AutoTrader's car finance calculator:

• Cost to buy: R250,000
• Deposit: R0
• Balloon Payment: 35% (R87 000)
• Repayment period: 60 months.
• Interest rate offered by the vehicle lender: 13.75%
• Total amount paid each month for the car: R4 763

Even though R4,174.08 a month might not seem like much, this is just the amount you're paying back on your loan—and remember, there's that pesky R87k balloon payment at the end. That's why you should find out what the cheapest cars to pay monthly are in SA.

Buying used? These are a few of the best, used hatchbacks for around R100k.

Related: How does a pre-approved car loan work?

 

Extra costs every month

Fuel

It costs around R1,000 to fill up a small petrol hatchback with a 40-litre tank. If the car uses 8 litres of petrol every 100 km, then driving 1,000 km every month will cost you at least R2,000 more every month.

(Keep in mind that the price of petrol is currently R25.22 per litre in October 2023 but fuel price relief has been confirmed for November.)

This is how SA'S Top 10 best-sellers fare on fuel

 

Car insurance

Getting insurance for a new compact hatchback can cost around R1,000 a month on average, and it's a necessity. When you add up your loan payments and petrol prices, your monthly costs go over R6,000. (Can you buy a car without insurance? Find out here)

Annual fees

Vehicle owners have to buy a new licence disc every year to renew their registration. The price depends on how heavy the car is; for a small hatchback, it's usually around R600 a year. (Do you have to register and license a car as soon as you buy it?)

Maintaining your car

If your car doesn't come with a maintenance plan from the manufacturer, you'll need to set aside money for regular maintenance like servicing and replacing parts that wear out over time. The cost of maintenance can easily go over R6,000 a year, which is about R500 extra a month. (Find out what the difference is between a maintenance plan and a service plan)

Toll fees

When you use major highways a lot, the tolls can get more expensive. Remember to factor in these costs.

Keeping your car clean

Let's say a car wash costs at least R100 per wash, you can add up to about R400 a month. If you do it yourself, then you don't need to factor this in, of course. Also, some cars look cleaner for longer than others; these are the colours you should pick.)

 

 

Verdict

In the end, a monthly cost of less than R4,800 that seems reasonable can quickly rise to R7,000 or R8,000. Accidents and other unplanned costs add to the financial stress. To cover the "balloon payment" due at the end of a 60-month term, you might need to save money every month or take out a personal loan, which could make your monthly car costs up to R9,000 or more.

Here's a pro tip...

Your home loan is the most cost-effective way to finance a vehicle. Your home loan has a lower interest rate than most car loans, and by simply restructuring this existing loan, you avoid the hassle of applying for a new loan.

Related: AutoTrader's Car Finance Glossary of Terms

Still a newbie where car finance is concerned? Read ALL our Car Finance news and advice here!