CRA Motoring & Personal Finance – South Africa

By Val van der Walt
Don’t make hasty decisions and make sure you understand all the different options.

Thinking of buying a new car, or your first car?

Here are some financial guidelines to help you make an affordable choice:

Divide by four

There is a general ‘rule of thumb’ that you shouldn’t be spending more than a quarter (25%) of your monthly income on vehicle related costs.

So, if you are earning R20 000 per month, your total vehicle expenses should not exceed R5 000.

And this should apply to the full vehicle expense, including vehicle instalment, insurance premiums and fuel costs.

While you might qualify for a more expensive car, the best financial advisors will tell you not to stretch your finances.

This year Covid-19 has already proved that the unexpected really can happen.

Be honest

We all want a fancy, flashy car and it is very tempting to ‘adjust’ your monthly expenses to squeeze in the car of your dreams.

Don’t do it.

When figuring out how much you can really afford, be brutally honest about your expenses and spending habits.

There’s plenty of online advice on
vehicle affordability, but the most effective method is to use a trusted online calculator.

Here you will have to factor in expenses such as education, groceries, loans, credit cards and entertainment to get an estimate of what you will be able to afford.

This will give you a very good indication of whether you can afford any kind of vehicle at this point and what price range you should be looking at.

Get the best advice

At this point, you should know what type of car you can afford, and possibly have a shortlist of vehicles that fall within your budget.

The best option is to approach your selected dealerships and speak to them about financing and the best possible deals on your vehicle of choice.

Vehicle financing is not a one-size-fits-all product.

Speak to your dealer about how you can structure a deal that best suits your needs, like whether you need to put down a bigger deposit.

There are many ways to tailor vehicle finance to suit your budget.

Don’t make hasty decisions and make sure you understand all the different options.

Your dealer is there to help you through the entire process, so ask as many questions as you want.

Article Credit to Zululand Observer.