Categories: NewsVehicle News
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2023-11-13 8:02 AM

Decoding South Africa’s True Car Ownership Costs

  • The True Cost of Car Ownership: The article emphasizes that the financial commitment of owning a car goes beyond the initial purchase and loan repayment, urging readers to consider various expenses associated with fuel, insurance, annual fees, maintenance, tolls, and car washes.
  • Financial Prudence in Car Selection: It advises potential buyers, especially in South Africa, to prioritize affordability over the allure of dream cars. Choosing a more budget-friendly model ensures that the overall costs, including monthly payments and additional expenses, remain within manageable limits.
  • Caution with Balloon Payments: The article highlights the importance of planning for the balloon payment at the end of the loan term and cautions against taking personal loans with high-interest rates, which could extend the car payment period significantly. It encourages readers to make informed decisions to maintain financial well-being.
By Miriam Matoma

In the vibrant landscape of South Africa, owning a car is often considered a significant milestone. Yet, beneath the allure of sleek vehicles lies a financial reality that extends far beyond the initial purchase price. Aspiring car owners must navigate through a multitude of expenses to ensure that the dream of cruising in their ideal vehicle does not turn into a financial burden.

Understanding the Full Spectrum of Costs:

When contemplating a major purchase like a car, it’s crucial to recognize that the loan payment is just the tip of the iceberg. Nedbank advises prospective buyers to prioritize affordability, emphasizing that it’s impractical to indulge in the thrill of dream wheels if financial struggles follow every month.

Let’s delve into the specifics using a popular choice among South Africans, the hatchback, represented by models like the Volkswagen Polo, Toyota Starlet, or Suzuki Swift. Consider a scenario where the desired model costs R250,000, and the financing details are as follows:

  • Purchase price: R250,000
  • Deposit: R0
  • Residual value (‘balloon payment’) option: 35% (R87,500)
  • Vehicle loan finance period: 60 months
  • Interest rate: 9%
  • Amount financed (excluding balloon payment): R162,500
  • Monthly admin fee for finance: R69.00
  • Once-off admin fee for finance: R1,207.50
  • Total monthly car installment: R4,174.08

Beyond the Loan Repayment:

While R4,174.08 a month may seem manageable, it’s imperative to acknowledge that this is just the loan repayment. Additional expenses lurk on the horizon:

Petrol or Diesel Costs:

  • Filling up a compact hatchback with a 40-litre fuel tank may cost around R1,000.
  • Assuming a consumption of 8 litres per 100km, monthly petrol costs for a 1,000km drive would be at least R2,000.

Car Insurance:

  • On average, insurance for a compact new hatchback can be around R1,000 per month.

Annual Fees:

  • Renewing the vehicle registration with a new license disc can cost approximately R600 annually.


  • Regular maintenance, including servicing and replacing fast-wearing parts, may add up to R6,000 or more per year.

Toll Fees:

  • Frequent travel on major highways can quickly escalate toll costs.

Car Washes:

  • Regular car washes, averaging R100 each, can contribute an additional R400 per month to your expenses.

Total Monthly Expenses:

Considering these factors, the initial R4,174.08 installment can easily escalate to a total of R7,000 or R8,000 per month. Moreover, unforeseen incidents such as accidents may further strain your budget, making it crucial to plan for unexpected expenses.

Balloon Payment Considerations:

Remember that the R87,500 balloon payment is due at the end of the 60-month loan term. It’s advisable to save a portion every month or explore the option of a personal loan. However, caution is advised, as a loan for R87,500 at 18.75% interest could result in a R4,900 monthly payment over 2 years, extending your car payment period to 7 years.

Buy with Financial Prudence:

In the midst of the excitement of purchasing a car, it’s vital to exercise financial prudence. Nedbank advises potential buyers to prioritize financial sustainability over fleeting desires. While the allure of a stylish car is undeniable, opting for a more affordable model that requires a smaller loan ensures that the additional costs remain within manageable limits. This approach guarantees peace of mind, as you won’t need to sacrifice other aspects of your budget to accommodate your dream car.


Owning a car in South Africa is a significant financial commitment that extends beyond the initial purchase. By understanding and planning for the various costs associated with car ownership, individuals can make informed decisions that align with their financial well-being. As the wheels of your dream car hit the road, let them carry the weight of financial responsibility with grace, ensuring a smooth journey through the diverse landscapes of South Africa.

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Miriam Matoma

Miriam is a freelance writer, she covers economics and government news for Rateweb. You can contact her on: Email: Twitter: @MatomaMiriam