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IOL News
25-05-2025
- Automotive
- IOL News
Are affordable cars truly worth it? Exploring the hidden costs of ownership
As South Africans grapple with rising living costs, understanding the hidden expenses of car ownership is more crucial than ever. Discover expert insights on how to navigate financing traps, maintenance costs, and insurance pitfalls to make informed car-buying decisions. South Africans are feeling the financial squeeze, and car ownership is no exception. With over 80% of households concerned about the rising cost of living, the difference between securing a good deal and falling into a financial trap often lies in the fine print. One of the most common pitfalls is opting for an 'affordable' car, only to realise later that it comes with significant hidden costs. 'A vehicle should offer freedom, not financial strain, but too often what looks affordable upfront ends up costing far more over time,' says Heide de Lange, spokesperson for Motor Plan Direct. From long-term financing traps to unexpected maintenance costs, de Lange shares seven key strategies to help South Africans reduce financial risk and make smarter long-term car-buying decisions: Beware the 84-month trap Long financing terms may lower monthly repayments, but they often increase the total interest paid, sometimes by as much as 50%, due to compounding interest. Similarly, balloon payments may reduce short-term costs but leave buyers with a hefty final bill. De Lange advises choosing the shortest repayment period possible and putting down a larger deposit to minimise interest payments. Avoid 'creative' finance schemes Step payments or deferred plans assume salaries will rise over time, but real-life expenses like school fees and healthcare often increase faster. Less risky alternatives, such as Guaranteed Future Value (GFV) deals, provide predictable end-of-term options while keeping repayments manageable. Factor in rising maintenance costs Vehicle maintenance costs are increasing by 6%–8% annually. A basic R2,000 service in 2015 could cost over R4,000 today. Luxury models often incur even higher costs for tyres, parts, and labour. To manage this, opt for cars with affordable parts and servicing, and factor maintenance into your monthly budget. Avoid insurance shortcuts High-excess insurance policies may seem cheaper, but they can leave motorists financially exposed when accidents happen. 'It's a short-term saving that can lead to major expenses at claim time,' explains de Lange. Instead, she recommends flexible cover that allows mid-term upgrades or downgrades and reduces risk through smarter driving and parking habits. A used car isn't always cheaper in the long run Although second-hand cars continue to outsell new models, affordability isn't the only factor to consider. Some new brands offer competitive pricing with features rivaling premium cars. Whatever the choice, buyers should prioritise service history, warranties, and long-term value, while considering a maintenance plan to avoid unforeseen expenses. Invest in long-term protection Extended warranties and service plans may seem like grudge purchases, but they provide fixed costs and protection against costly repairs. 'It's important to remember that it's not just about the cost—it's about confidence,' says de Lange. Think beyond the monthly instalment 'With cars being both essential and expensive, the best way to stay on the road is to consider the full cost of ownership, not just the monthly instalment,' de Lange says. 'The first step is to rethink the upgrade. Make sure your dream car doesn't become a financial nightmare. Holding onto a well-maintained vehicle can save thousands compared to the upfront costs of buying a new one.' PERSONAL FINANCE
The Citizen
17-05-2025
- Automotive
- The Citizen
Beware: the hidden costs of owning a car
A car is the second most expensive purchase you will ever make and it is important to keep all the hidden costs in mind. Owning a car does not only mean making sure that you can afford to repay the bank every month. There are many hidden costs that you should consider before you buy a car to ensure you can really afford your wheels. As living costs increase, South African consumers are rethinking how they buy and maintain their cars, Heide de Lange of Motor Plan Direct, says. 'Inflation may be slowing, but over 80% of South Africans remain deeply concerned about the rising cost of living, especially when it comes to cars. A car should offer you freedom, not financial strain, but too often what looks affordable upfront ends up costing far more over time.' ALSO READ: This is how much it really costs to keep your car on the road Beware of hidden costs From financing traps to maintenance surprises, De Lange offers these seven strategies to help consumers keep their car costs under control: #1: Beware the 84-month trap: Long payment terms may reduce your monthly instalments but often increase total interest paid by up to 50% due to compounding interest. Similarly, balloon payments may lower short-term costs while leaving you with a hefty final bill. Choose the shortest repayment period you can afford and aim to put down a larger deposit. #2: Avoid 'creative' finance: Step payments or deferred plans assume rising salaries, but real-life expenses like school fees and healthcare costs often grow faster. Consider less risky alternatives like guaranteed future value (GFV) deals. These offer predictable end-of-term options while keeping repayments manageable. #3: Account for rising maintenance costs: Vehicle upkeep is increasing by 6% to 8% annually. A basic R2 000 service in 2015 might cost more than R4 000 today. Luxury models can cost significantly more in tyres, parts and labour. Plan for it by opting for cars with affordable parts and servicing and build maintenance into your budget. ALSO READ: Buying a car? Keep this in mind #4: Avoid insurance shortcuts: High-excess policies may seem like a saving, but when accidents happen, they can leave you exposed. It is a short-term saving that can lead to major expenses at claim time. Instead, look for flexible cover that allows mid-term upgrades or downgrades and reduce risk through smarter driving and parking habits. #5: A used car is not always better than a new one: Used cars continue to outsell new ones, driven by affordability but some new brands like Haval, Chery and LDV offer competitive pricing and features rivalling premium cars. Whatever you choose, prioritise service history, warranty and long-term value. Consider a maintenance plan to reduce the risk of unforeseen expenses. #6: Build protection into the budget: An extended warranty or service plan may seem like a grudge purchase, but it offers fixed costs and shields you from expensive surprise costs like repairs for mechanical failures. It is important to remember that it is not just about the cost but about confidence. ALSO READ: Here's why you should – and why you shouldn't – buy a new car
