By Jessie Taylor
Buying a car can feel like a straightforward financial calculation, but the number on the finance agreement is only one part of what it costs to keep a vehicle on the road.
Often, motorists calculate their vehicle costs using little more than their fuel bill and finance repayment. Research from the Automobile Association (AA) of South Africa found that almost 40% of surveyed members did not know how much their car cost them each month. Yet tyres, insurance, maintenance, licensing, unexpected repairs and other expenses can add significantly to the overall bill.
Understanding these less obvious costs can make it easier to build a realistic household budget and avoid unpleasant financial surprises:
Depreciation
One of the highest costs of owning a car does not involve handing over money every month at all: it is depreciation. A vehicle generally loses value as it gets older and accumulates kilometres. A typical new vehicle loses an estimated 15% to 20% of its value during its first year. That loss matters when you eventually sell or trade in the car. Depreciation varies substantially between models, so researching resale values before buying can help. A car that holds its value relatively well can reduce the long-term cost of motoring.
Insurance
Insurance is another major monthly expense that can be easy to overlook when concentrating on the instalment. Your premium depends on factors including the vehicle, your driving history, where you live and your insurer. It can also change over time. For financed vehicles, comprehensive insurance is generally required by the financier. Even once the vehicle is paid off, however, cancelling cover to save money can expose you to potentially substantial costs following an accident, theft or write-off.
Maintenance and servicing
A service plan can make scheduled maintenance more predictable, but it does not necessarily cover every cost associated with keeping a car in good condition. Brake pads, wiper blades, tyres and other consumables eventually need replacing. Older vehicles can also require more frequent maintenance, while major components can become expensive as a car ages. Budget for once-off expenses such as maintenance and tyres rather than waiting for them to arrive unexpectedly. Keeping a record of what you spend each year can help you estimate future costs more accurately.
Tyres
Tyres deserve their own line in the budget because replacing a full set can be a sizeable expense. How quickly tyres wear depends on factors such as how much you drive, the roads you use, your driving habits and the tyres fitted to the vehicle. It is worth checking the recommended tyre replacement intervals for your vehicle and researching replacement prices before you need them. This turns a potentially painful surprise into a planned expense.
Unexpected repairs
Even a well-maintained vehicle can develop a problem. A cracked windscreen, damaged suspension, a failed component or pothole damage can result in an unexpected bill. An emergency vehicle fund can help absorb these costs without forcing you to rely on a credit card or other expensive borrowing.
Licensing and registration
Your annual vehicle licence is another cost that can disappear from your monthly budget because you only pay it once a year. South African motorists must renew their motor vehicle licences annually, and late renewal can result in penalties and arrears. Rather than treating the licence renewal as an annual financial shock, divide the expected amount by 12 and put that amount aside each month.
Finance interest and balloon payments
The instalment displayed by a dealership does not represent the full amount you will necessarily pay for the vehicle. If you finance your car, interest adds to the purchase cost. While a balloon payment (a large lump sum payable at the end of the finance agreement) can reduce monthly repayments, buyers need to plan for the eventual payment rather than treating it as a problem for their future selves. Before signing a finance agreement, look at the total repayment amount, interest, fees and any balloon payment, not just the monthly instalment.
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The small costs associated with owning a car quietly add up. There are the expenses that may seem too small to worry about individually: car washes, cleaning products, parking meters, roadside assistance, replacement bulbs, windscreen repairs and occasional accessories.
None of these expenses is likely to break a budget on its own, but together they can become a meaningful annual amount.
A car can provide independence, convenience and access to work and family life. The goal is not to make car ownership seem unaffordable, but to make the financial commitment visible. When you know the full cost, you can plan for it – and make sure your car works for your budget rather than the other way around.
Sources: Automobile Association of South Africa | Nedbank | South African Government | WesBank
