Owning a car is more than just the monthly payment. You see an ad for a monthly payment of two to three thousand yuan and think, “I can afford it.” The truth is, you might be able to get your first car before the end of the month – all considerations considered – but you'll have to pay more than your monthly instalments before you can drive.

Yes, there is a problem. Insurance, licensing and registration, annual plate fees and the additional cost of changing tires are not part of the annual service – did you know?

1. One-time costs of owning a carFor the average South African, buying a car with cash is not an option, although it would be the best way to eliminate the maximum monthly repayment cost (plus interest). For example, the advertised price may be R200 000, but by the end of the term (usually 72 months) you have paid almost double that amount. For example, you spend approximately R400 000 on a car and its market value has dropped significantly in the five years since you first bought it.

   deposit

   Purchasing a car through bank financing is the most popular way to obtain car ownership, but without sufficient savings, this option can be costly in the long run due to interest on credit.

   If you've been saving money, you'll know that the bigger the deposit, the lower the installments, but more importantly, the higher the interest rate the bank charges you.

   road expenses

   When you buy a car, you may find a line item on your invoice for "on-road charges/costs" (OTR). Also known as "dealer fees" or "service and delivery fees," look closely and you'll see that even the little things matter. Typical OTR fees include the following items:

   – Pre-delivery inspection/safety inspection
   – Airworthiness certificate
   – Deliver fuel
   – Initial fuel
   – HPI gap
   – Administration
   – Financial Stability Board fees
   – Cleaning or valet fees

   The OTR fee is a common one-off fee, but your ability to negotiate the final fee comes into play here, as the amount can add an extra R4 000 to your monthly premium.

   Service and Maintenance Plan

   Do you know the physical exam you should have every year? Your car needs it too. Unlike your car, skipping it may affect your car's future value. If you've ever tried to sell a car with no maintenance history, you know how important evidence that it has been cared for is to a potential buyer.

   Although you'll need to pay upfront (financing is available), having a service plan and maintenance schedule will pay off in the long run. Your service is guaranteed, and depending on your plan, you won't be held responsible for any faulty parts in your car.

   Keep in mind that your service and maintenance plan may not cover everything, such as a new car battery, so you may need to add a few thousand rand to your car emergency fund.

    

2. Monthly expenses of owning a car
   
   When you realize that your car finance debit order isn't all you've spent on your car this month, you're still used to the beep of your car locking up and your commute playlist cruising through traffic to keep you going.fuelAfter your monthly car payment, your biggest expense is fuel. Whether it's petrol or diesel, keeping your car running will account for the largest portion of the cost of staying mobile. That's why it's important to calculate your car's gas mileage before making a choice.The importance of fuel efficiency depends on how far you drive each day as well as other considerations, such as fluctuating fuel prices.Remember to consider the class of vehicle you plan to purchase, as this will also affect your fuel budget. Most brands publish fuel consumption figures based on urban and rural terrain, so think about your most common routes and use that to find out what your expected fuel costs are.

   Insurance

   It's a resentment purchase, but in the event of a theft, hijacking, or accident, you'll be glad you purchased the insurance before getting behind the wheel of your new wheels. Additionally, dealers (and banks, if you financed the car) won't let you drive off the lot without insuring the car.

   Banks are primarily concerned with keeping their investment safe until you pay it off, which is why having an active comprehensive insurance policy is a requirement for contract vehicle financing.

   But insurance means you’re covered even after you’ve paid off the car, saving you huge replacement costs

    

3. annual cost of car

   If you decide not to use a maintenance and repair plan, you'll still need to come up with some money to pay for your car's annual maintenance and general repairs. Ask your car dealer or repair agent how much repairs and basic parts will cost, then figure out how much money you need to save each month to pay for repairs when they're due.

   A helpful cost-saving tip is to find a trustworthy mechanic to perform all maintenance and repairs if you buy a used car without a warranty.

   Another annual cost is your driver's license plate fee, which increases for every month overdue. If you do not renew your expired motor vehicle license, you will be given a 21-day grace period. The grace period starts from the expiration date of the current driver's license plate. You will pay a road use permit fee to your local registration authority each time you renew your vehicle license.

4. periodic costs

   Service and parts account for 34.97% of entry-level car maintenance costs. As a new car owner, this is what you'll pay for service if you choose not to renew your warranty after it's over, as well as the cost of replacement parts over the life of the car.

   Replacement parts

   Research how much it might cost to replace parts on your new car. Locally built cars generally cost less to repair because parts do not need to be imported. Before deciding to buy a car, it's a good idea to compare replacement parts across makes and models.

   Try asking the dealer you purchased the car from if they have replacement parts in stock or if they need to be ordered as needed. The answer to this question may be the difference between a quick repair and a longer delay.

   tire

   The tires on your dream car? They are quite expensive. Each tire costs over R2000. They may appeal to you as part of a package (who doesn't like bigger wheels and tyres?), but replacing them isn't cheap – especially when you have to get a new set every 50,000km.

   If you're considering buying a regular hatchback or sedan, you probably don't have to worry too much about standard-size tires, as they tend to cost less. The unusual size can put a strain on your wallet, especially if all four tires need to be replaced at the same time.

   It's unlikely that just one tire will need to be replaced, as wear usually occurs in pairs. Avoid replacing individual tires to ensure even front and rear traction on your vehicle.

   Driving license renewal

   Therefore, this fee will be incurred regardless of whether you drive the car or not, as long as you are a legal driver. A driver's license is valid for a limited period, usually five years, and then needs to be renewed. There is a fee to apply for renewal and it is mandatory. If you are caught driving with an expired driver's license, you are effectively without a driver's license.

   On the topic of breaking the law, speeding fines and other road offenses can be expensive, so try to follow the rules of the road to avoid incurring extra costs.

5. Find the right person/thing

   After considering the amount of money you have available to cover your car loan and car operating costs, use a car loan calculator to determine the loan amount that fits your budget.

   Calculations are provided as a guide only to indicate the price range within which you may purchase and do not guarantee that you will qualify for a loan of that amount. Once you determine what you can afford, start looking for a car that suits your needs but ticks all the boxes.

Peace of mind is priceless

Contact Cartrack today and let us help you keep you safe on the road with our world-leading in-vehicle tracking and connected telematics solutions.