What to consider before buying a car in South Africa

 ·24 Mar 2024

Buying a car is an exciting endeavour but also a massive financial commitment that requires a complete understanding of the expenses involved.

Choosing a car that one can afford but is not necessarily the one a customer wants is a sign of financial maturity.

The general rule is that one should spend no more than 20% of their total income on car repayments.

“A car is a big purchase. Most people cannot afford to buy a car in cash,” said Pearl Cele, Operations Manager at FNB Consumer Education.

“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 financing.”

Cele thus shared five tips that consumers should keep in mind before buying a car:

What is the actual purchase price

This is the vehicle’s initial cost, which can be paid in cash or financed through a loan.

Financing costs

Customers should learn more about interest rates, loan terms and any additional fees that are part of the loan.

For instance, balloon financing may reduce the monthly installments but will require someone to pay the limp sum settlement, known as the “balloon payment” at the end of the loan term.

The longer the loan term, the more one is likely to pay in interest over the life of a loan. 


The right insurance is a necessity. It can change depending on the driver’s record, the type of cover, and the make and model of one’s vehicle.

Insurance quotes for the vehicle must be factored into the overall cost.

Fuel prices

Fuel costs remain a financial burden for many consumers as they are a major cost associated with owning a car.

Fuel efficiency is thus a significant factor to consider when choosing a vehicle.

Regular services and maintenance

Unexpected repairs should also be factored into one’s budget, as some vehicles have higher maintenance costs than others.

A well-maintained vehicle is attractive for buyers who want 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,” Cele said

“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.”

FNB’s Pearl Cele

Read: Patel gives EV manufacturers the green light in South Africa

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