CRA Personal Finance & Motoring Explored
What are the real costs of vehicle ownership and factors to consider before buying a car, and given the fact that many of us are now working from home and travelling far less, is ownership worth it?
There is no doubt that there are many benefits to buying your own wheels. For many people, it’s the convenience of being able to travel whenever you want. And for some, a car is a necessity for work, or because public transport is not readily available.
Personal finance website JustMoney spoke to experts to give you a breakdown of the costs that come with car ownership.
Costs to consider
According to Kriben Reddy, vice president of auto information solutions at TransUnion Africa, the following are the most important costs you need to consider when deciding whether you should buy a car.
Fuel: Beyond a deposit and monthly premiums for non-cash purchases, the first major cost of owning a car is fuel. Whether it is diesel or petrol, this is an ongoing cost that will fluctuate in line with inflation.
Insurance: If your car is financed, the seller, on behalf of the financier, won’t release it to you unless it is insured. Insurance is imperative to protect you, the owner, and your creditor.
Find out more about which car insurance is the cheapest for young drivers here.
Motor/service plan: If you are buying a second-hand car that is almost out of a motor plan, or a brand-new car where you opted against a motor plan, to increase your chances of affording the car, then this is a cost you will have to consider.
Maintenance costs: These range from renewing your license disc annually, to replacing tyres or any other parts that are not covered by either your motor plan or insurance.
Shafeeka Anthony, Marketing Manager of JustMoney, says: “In addition to these variables, keep in mind that the number of kilometres you drive annually, the type of terrain you cover, and even the way you drive, will also affect the cost of running a car.
“The cost of insurance can also vary depending on whether the driver is female or male, your credit score, place of residence, occupation, and claims history.”
What are the alternatives?
The cheapest alternative to owning a car, other than walking or cycling, is of course public transportation. E-hailing services, such as Uber and Bolt, cabs or car rentals can work out to be more expensive than a vehicle purchase.
“E-hailing is cheaper if you are going into the office once a week with limited in-person meetings,” Reddy says. “However, if you have to go into the office daily, or attend several daily meetings that require travel, this option then becomes expensive.”
Dov Stern, director at MotoMatch, says it all boils down to your budget and your ability to finance a vehicle or purchase the vehicle that you want outright.
“When your financial position is not stable or if you expect that you will be under financial pressure in the short term, rather consider options like rent to buy,” says Stern. In this way, you have access to a car and can swap, cancel or buy the car at any time.
It may be cheaper to buy a car on auction, rather than through a dealership. Find out more about how car auctions work and whether you should consider them here.
What about second-hand cars?
Used cars definitely are an excellent option, especially for customers looking to get great value for their money. These vehicles have depreciated, so the prices offered are more attractive than the equivalent new car, Stern says.
If you do decide to go this route, be sure to check the following:
- Get the car’s roadworthy certificate, so you can see any issues that need to be addressed.
- Check that the car has been serviced at each of the required service intervals and that the dealer/service centre that performed the service has stamped the service book.
- The average yearly mileage is 25,000 km, so be aware if you are buying a higher mileage vehicle.
- Check if the car is still under warranty or has a service/maintenance/motor plan and for how long this plan is still applicable. Ask if it’s possible to extend the warranty/maintenance plan as this could save you a lot of money in the long term.
- Make sure the car hasn’t been in any major accidents and/or it hasn’t been rebuilt. You can check for a rebuild on the NaTIS certificate, under “vehicle status”. This should say “used”. Request an accident damage report and test drive the vehicle.
Says Anthony, “With interest rates currently at a record low, many people who have been considering investing in a vehicle will be tempted to make that purchase. As with all major investments, it’s important to do your homework first. What could look like a bargain could turn out to be a major drain on your household budget. Deal through reputable providers, get comparative quotes and be honest with yourself about your financial position and needs.”
Read a JustMoney guide on car insurance here.
Do your homework first to ensure you drive off with a good car deal that won’t strain your budget, advises personal finance website JustMoney.
Article Credit to WomanonWheels.
Are you in the market to buy your first car and have you considered all the above costs of ownership before committing to your purchase? What are the major obstacles in your way to own your first car? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.