Calculating your budget: The real cost of car ownership

With South Africans currently benefitting from record-low interest rates, it is easier than ever to get a great deal on a new or previously-owned car. However, the true cost of car ownership goes well beyond the purchase price of the car. Before signing on the dotted line, make sure you’ve calculated the monthly instalment, insurance premium, petrol and maintenance fees.

Although interest rates are currently low, the TransUnion SA Vehicle Pricing Index (VPI) for the last quarter of 2020 showed an increase in price of both new and used vehicles. New vehicle price increases remain above inflation and are expected to increase further in the coming months.

In a statement recently released by Wesbank Motor, Lebogang Gaoaketse, head of Marketing and Communication, said, “In January this year, the average value of a new vehicle financed through WesBank was R358,390 compared to January 2020 when the figure stood at R327,723. This reflects a 9.4% year on year average price increase for new vehicles.”

Does that mean it’s better to buy an older car? It’s not a clear answer. Newer cars lose their value as soon as you drive it off the lot, and with older cars you don’t have to worry about depreciation. However, there are other factors to consider – insurance premiums are sometimes higher on a newer vehicle and maintenance can be costly. 

So you’ve found your dream car and calculated your monthly instalment, now it’s time to figure out the post-purchase expenses you’ll need to build into your budget.

• Vehicle registration and car license fee. Costs vary per province, so contact your local licensing office to find out the fees. 
• Insurance costs. Selecting insurance cover might seem difficult and can vary from person to person depending on their needs. The best way to find savings is to compare different insurance quotes, and the MotorHappy team is ready to help. Contact us today for a quote and we will source a selection of quotes from South Africa’s top insurers, and we’ll also help you understand the terms in the different contracts. 
• Car service plan and maintenance plan. When it comes Extended Warranties, Service Plans and Vehicle Maintenance, MotorHappy has you covered. Contact us today for a quick, hassle-free quote and we will help you keep your car on the road with a fixed, affordable monthly payment plan. Click here to get started with your MotorHappy quote. 
• Petrol. According to Wesbank Motors, petrol costs make up 34% of the total cost of car ownership. The figures for 2020 show the monthly fuel spend was an average of R2566. However, it’s important to note that these figures are slightly skewed considering we were in lockdown for much of 2020, which meant people were driving less and therefore using less petrol. The average monthly spend in 2019 was R2732.