When buying a car, most people fixate on the sticker price or monthly payment. But the true cost extends far beyond these obvious expenses.
In reality, there are other expenses that come with owning a car like: insurance, maintenance, fuel, cleaning and depreciation.
It’s not entirely your fault if you’ve overlooked these. Dealerships and banks are supposed to explain the true cost of ownership before you sign the papers. But they don’t, because if they did, many buyers might think twice.
That’s why it’s up to you. Whether you’re buying your first car or switching to a new one, you need to understand and budget for the real cost of owning the car..
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Monthly cost of a car in South Africa
Let’s take an example. If you want to buy a 2023 Ford EcoSport priced at R250,000. Using Autotrader’s car finance calculator, here’s what the repayment looks like:
- Retail price: R 250,000
- Initial deposit: R 50,000
- Repayment period: 60 months or 5years
- Interest rate: 10.5%
- Monthly repayment: R 4,299
So your monthly repayment is R4,299. It’s not the cheapest car on the market, but at first glance the payment seems manageable. You might even think you’ll have money left to save after covering this payment and your personal expenses.
But that’s only the beginning.
Insurance
If you’re financing your car, the bank won’t let you drive off with the car until you provide proof of insurance. For a Ford EcoSport, this typically costs between R1,500 and R1,800 per month.
Even if you’re buying without a loan, insurance is protection against accidents, theft, and other unexpected costs that can be far more expensive than the insurance premiums.
With insurance added, your monthly car expense now rises to about R6,099.
But we’re not done yet.
Fuel cost
Fuel is one of the major costs of owning a car. How much you spend depends on how often and how far you drive, as well as fuel prices.
For daily commuters, fuel can make up as much as 40% of the total monthly expense.
In South Africa, this means you could spend between R3,000 to R3,500 on fuel every month.
If we add fuel to the loan repayment and insurance, the monthly cost of the EcoSport climbs to about R9,599.
And there are still more expenses to consider.
Maintenance and Servicing
Whether your car includes a service plan will determine your monthly maintenance costs. As a good practice, set aside at least R550 monthly for maintenance and servicing.
Cleaning
If you spend R120 at the car wash every weekend, you’ll pay roughly R480 monthly for cleaning.
Total monthly cost
Taking everything into account, your total monthly costs for the Ford EcoSport, including repayments, insurance, fuel, maintenance, and cleaning amounts to R10,629.
Other long term costs to consider in your budget
- Vehicle licensing: Your vehicle license has to be renewed every year. This will cost up to R1500 per year for larger vehicle sizes. But for smaller sized vehicles, it’s typically under R1000. (Follow this guide to register and license your vehicle)
- Tires, wipers and brake pad replacements: These parts and components wear out with use and require replacement annually, or every two years with gentle use.
- Depreciation: Cars lose value from the moment you drive off the lot. This loss can be substantial depending on purchase timing, mileage, age, wear and tear, or accident history.
Vehicles lose 15-20% of their value in the first six years, then 5-7% annually from years 6-15.
At Tarlen, we advise clients to avoid new cars and instead purchase at year five when the steepest depreciation has passed.
While the Ford EcoSport may seem affordable at just over R4,000 in monthly repayments, these additional factors are crucial when determining whether you can truly afford vehicle ownership.
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