It’s not just the price – the other expenses add up to more than you’d expect.
Buying a car is very exciting and the freedom it brings is exhilarating if it’s your first one. But you need to keep a bigger picture to keep in mind and not get carried away with the emotion.
More than the price tag
You need to look beyond that big number on your dream car’s windscreen – it’s going to involve costs above and beyond the price. These include VAT, interest and admin fees as well as insurance, which is compulsory for any finance contract.
Remember that if you opt for a flexible interest rate, your monthly instalment may be higher or lower from time to time and you need to budget for that.
Don’t forget about operating costs
Keeping your new car on the road and in perfect running order also costs money. Operating costs include petrol, servicing (if you don’t have a service plan) and repairs, your annual vehicle licence and even toll fees and traffic fines. Your expenses can vary quite a bit from month to month and they increase over time. This is partly because of inflation but also because the older a car is, the more it costs to maintain and the higher the fuel consumption.
While you don’t actually pay any cash for depreciation, it affects how much your car is worth when you want to sell it. Simply through wear and tear over time, a car loses value. As soon as drive your new car off the showroom floor, it loses some of its value. On average, a car loses 20% of its value every year. Depending on your finance period and interest rate, after 5 years a car is generally worth half of what you paid for it. Also, some makes and models of cars depreciate faster than others.
All the little things add up
Parking fees, car washes, even those little air fresheners – all add up over time. A monthly car wash at an average of R100 adds up to R1,200. Cleaning it yourself isn’t exactly free either when you think of the special soap and cloths. Even if your parking at home and work are free, you will probably need to pay for parking at shopping malls or airports.
Bottom line, don’t over-extend yourself by going for a car that has monthly instalments you can only just afford. The other costs will catch up with you sooner than you think. Look for a safe, fuel-efficient car that you can afford comfortably and suits your needs.
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