Beyond the Monthly Payment: A Smarter Way to Gauge Real Car Affordability

Buying a car? Learn how to look beyond the monthly instalment and calculate the true cost of ownership to protect your financial future.

There is a defining moment in the car-buying journey where emotion inevitably takes the steering wheel. It usually happens the second you sit in the driver’s seat, imagining future road trips, the daily commute, and the intoxicating sense of freedom that comes with a new set of wheels.

However, this initial excitement often masks a looming financial reality. Many buyers fall into the trap of focusing on a single, narrow figure: the monthly instalment. If that one number fits the budget today, the deal feels like a win. But as Lebogang Gaoaketse, Head of Marketing and Communications at WesBank, warns, “The thrill of a new car is undeniable, but it should never come at the expense of financial stability.”

To truly enjoy your vehicle without the shadow of financial anxiety, you need to look beyond the instalment and stress-test your lifestyle against the long-term commitment of vehicle ownership.

The “What If” Factor: Stress-Testing Your Life

Life rarely follows a linear path. Between the arrival of a new child, career shifts, or unexpected medical bills, your ability to meet a five-year finance agreement can change overnight.

When assessing affordability, experts suggest looking at your income through a “worst-case” lens. Could you still manage that car payment if your income dropped by 20%, or if your monthly household expenses spiked unexpectedly, especially in South Africa’s current economic climate? Before signing, it is vital to understand what safeguards, such as credit life insurance or payment relief options, are available to protect you if you are suddenly unable to work. These protections often feel unnecessary when times are good, but they are the only thing standing between you and financial hardship when life takes a turn.

Calculating the True Cost of Ownership

One of the most common mistakes buyers make is forgetting that the purchase price is only one part of the financial equation. A vehicle that carries a R5,000 monthly instalment can easily cost R7,500 once you factor in the “hidden” essentials:

Insurance premiums
Fuel costs
Routine maintenance
Interest rate fluctuations
Depreciation

Read: The Hidden Truth About Car Ownership in South Africa

Failing to account for these variables puts sustained pressure on your household budget, often leaving little room for anything else. Financial advisers generally recommend that your total vehicle-related expenses should stay within 15% to 20% of your gross monthly income. If your car is consuming 30% of your salary, you are left vulnerable to even the smallest rise in living costs.

The Power of the Deposit

While modern vehicle finance has become increasingly flexible, this accessibility can sometimes mask underlying risks. One of the most effective ways to lower your long-term risk is through a larger upfront deposit.

An african women who has made a deposit on their car

A solid deposit does more than just lower your monthly repayments; it reduces the total interest paid over the life of the loan and acts as a buffer against depreciation. If you owe more on a car than its market value, you face a significant financial gap if the vehicle is written off or needs to be sold early.

Read: Here’s Why a Deposit Could Save You Money

Ask the Hard Questions Early

“It is critical to fully understand your finance agreement before signing,” says Gaoaketse. Before you commit to the next five years or more, ensure you have clear answers to these questions:

What flexibility exists to restructure payments temporarily?
Are there penalties for early settlement?
What happens if the vehicle is written off?
Are there options to reduce monthly commitments if my circumstances change?

The Bottom Line

Vehicle finance is a powerful tool that provides access to reliable transport while preserving your capital for other priorities; provided it is approached thoughtfully.

Before signing your next vehicle finance agreement, take a moment to calculate your true cost of ownership. Visit WesBank’s affordability tools to stress-test your budget before committing.

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