When you think about buying a car, the first mistake you’re going to make is only being concerned about the price tag. The price of the vehicle itself is only one cost included financing a car. Your car loan is one expense that comes with buying and owning a car, and you should be aware of the costs before you go with what the car loan calculator says you can afford.
When you look at your monthly budget, you need to include the following five costs to make sure you aren’t stepping into a financial commitment you can’t afford. Unfortunately, there’s no way around these obligatory motor expenses.
Car loan repayments
The bulk of your vehicle expenses will be the persistent monthly car loan repayment figure. In the initial phase of car financing, you would have used a car instalment calculator to work out how much you’ll be paying for your car every month.
This instalment is a combination of the vehicles price and interest from the loan accumulated over the period you chose to pay off your loan. This is usually a cost of a couple thousand Rands.
It might sound contradictory, but to save money on your car loan in the long-term, it requires you to pay a larger instalment over a shorter period of time. This way, the total interest is reduced and you won’t end up in an upside-down car loan where you pay more for the car than what it’s worth (due to added interest).
But before you decide to raise your monthly instalment to pay off the car sooner, you need to consider the other four costs you’ll be budgeting for.
A monthly insurance plan
Before you are handed the keys to drive your new car off of the showroom floor, you will have to take out an insurance plan for your vehicle. You need car insurance, whether you think you’re an excellent driver or not.
It’s not a question of your driving ability, but rather a precaution to bad weather, quality of the roads, other drivers and even theft. Accidents happen every single day and it’s in you and your vehicle’s best interest to be covered in the event that anything happens while you’re behind the wheel of your car. The payouts are always worth the insurance cost.
Depending on the insurance company you go with, you’re looking at an extra grand to top off your car loan instalments.
A yearly service
Your car is supposed to go for a service around every 15 000 km or at least once a year (depending on your driving patterns). These services are either minor or major but both are costly.
These services check and change your oil, clean and replace your filters, locate any leaks, replace windscreen wipers if necessary, check your spark plugs, and test the general operating ability of the vehicle.
Should they find anything out of the ordinary that requires repair, replacement or special attention, they will contact you and provide a quote for taking care of it. It’s not advisable to leave your car as it is. If a problem has been picked up, you need to deal with it before it causes further irreparable, dangerous or expensive damage.
You’re looking at anything from R3 000 to R10 000 for a car service – sometimes before they’ve added the cost of special repairs. Most people can’t fork that kind of money out in a month. That’s why it’s a good idea to save money every month specifically for your yearly service. Those increments will make it more affordable in the service-month but will also be adding to your expenses.
Changing your tyres
Your tyres are expected to last for about a year. But, depending on how you drive, where you drive and your luck, there’s a chance you’ll need to replace your tyres more often. Maybe not all of them, but picking up punctures and wearing your front wheels down happens more often than we expect.
And at R800+ a tyre, it can become quite costly. There’s only so much you can physically do on the road to prevent tyre damage but the road is full of sharp-edged surprises that we can’t see. Make sure you budget for your annual tyre replacements and to always have a fresh spare tyre in the back.
Filling your fuel tank
The most regular cost you will be undertaking for the ownership of a vehicle is for filling up your fuel tank. This can happen more than once a month and cannot be set as a fixed estimate as the price is always rising and falling as the months go by.
But for a rough estimate, a standard 45-litre tank (at the current price of R15,86 a litre as of 5 September 2018) will cost you R713,70 to fill. And if you drive from the Northern Suburbs to Cape Town CBD for work every day, you’re probably going to need to fill your tank once a week.
Your full fuel tank, along with the other four costs mentioned, needs to be in your overall car financing budget if you want to comfortably afford this venture.