The real cost of owning a car

Operations Manager at FNB Consumer Education, Pearl Cele. PHOTO: SUPPLIED

While buying your first car marks an exciting milestone, it is still a significant financial commitment, which requires a thorough understanding of the expenses associated with car ownership.

Opting for a vehicle within your financial means, rather than solely based on desire, reflects financial maturity. The general guideline is to allocate no more than 20% of your total income towards car repayments.

Pearl Cele, Operations Manager at FNB Consumer Education, explained: “A car is a big purchase. Most people cannot afford to buy a car in cash. Vehicle finance is one way for people to buy a car without having to pay the full amount upfront. Instead, they can spread the cost over time through a financing arrangement.”


Cele has shared five key things consumers should keep in mind before buying a car:

  • What is the actual purchase price: This is the initial cost of the vehicle which would either be paid in cash or financed through a loan.
  • Financing costs: Find out more about interest rates, loan terms, and any additional fees associated with the loan, including balloon financing, which may reduce the monthly instalments but requires you to pay a lump sum settlement, known as a “balloon payment” at the end of the loan term. The longer the loan term, the more you are likely to pay in interest.
  • Insurance: Having the right insurance is a need. It can vary based on things like your driving record, the type of cover, and the make and model of the vehicle. Get insurance quotes for the vehicle you’re considering so you can factor this into your overall cost.
  • Fuel prices: Fuel is a major cost associated with owning a car. Fuel efficiency is a big factor to consider when choosing a vehicle.
  • Regular services and maintenance: Unexpected repairs, should be factored into your budget. Some vehicles may have higher maintenance costs than others. A well-maintained vehicle is attractive for buyers should you wish to resell or trade in for a new model at a later stage.


“Vehicle financing can be a convenient way to get a car, but it’s important to make informed decisions to avoid financial strain. It’s essential to carefully read and understand the terms of the financing agreement, including interest rates, loan duration, and any additional fees. Make sure the monthly payments fit within your budget and be aware of the total cost of the loan over its duration,” concluded Cele.


Compiled by Warren Hawkins