The True Cost of Car Ownership
According to Fin24, banks recommend that your car doesn’t exceed 30% of your annual gross salary, and the monthly costs shouldn’t equal more than 10% of your salary. If you wanted to buy a R1,3 million Porsche Cayenne Coupe with financing from a bank, your salary would need to be in the region of R4,3 million per year (or R360,000 a month) to secure a loan. With a R100,000 deposit and 72-month loan with 7% interest, you’d pay back over R20,000 per month.
But this is a fantasy for most, so let’s pretend you just won the Lotto or got a massive inheritance. You’re itching to drop R1,3 million cash – you can afford your dream car now, right?
Not so fast. The cost of the car won’t be the only expense.
Most of us don’t drive luxury 4x4s or super-sexy sports cars, so it’s easy to underestimate how much petrol it’ll take to keep your slick new ride going strong (and fast). Here’s how much it costs to fill up mid-range cars versus luxury cars as of March 2021 (R16.32 per litre of 95 Petrol):
2018 Polo Vivo: R734.40 to fill up the 45L tank with a fuel consumption of 6.1L/100km
2017-2018 BMW 440i: R979.20 to fill up the 60L tank with a fuel consumption of 9.9L/100km
2019 Porsche Cayenne Coupe: R1468.80 to fill up the 90L tank with a fuel consumption of 9.4L/100km
2016-2017 Maserati Quattroporte: R1305.60 to fill up the 90L tank with a fuel consumption of 15.3L/100km
It’s clear that 4x4s and luxury sports cars don’t just cost more, they cost more to drive as well.
While someone with a Polo Vivo will spend around R1,070 on petrol each month, a person with a Maserati Quattroporte will spend almost R3,500 to drive the exact same distance.
What happens if you bust up the Bentley?
If you damage a tyre on your Porsche, you’re looking at up to R4,500 per tyre, while a tyre on a Polo Vivo will usually cost under R2,000.
We don’t want to give you a heart attack, but a top-of-the-range Pirelli tyre for a Lamborghini can cost over R20,000 – and there are many more mechanical faults that can present over time, no matter what car you drive.
Of course, you’ll also want car insurance. Car insurance is risk-profile dependent, so two people may pay different premiums even if they drive the same make and model of car – but in general, a more expensive car will have higher premiums because it’s more expensive to replace or repair.
Before you dig deeper than your pockets will allow, think carefully about how much debt you’re willing to take on – not just in financing a luxury car, but in maintaining it too.
Cars are almost always a depreciating asset so no matter your budget, you should always stay within it. Understanding all the costs that accompany the purchase of a car can make you think twice about what car you want/ can afford to get. There are options that may lighten the financial burden of car, such as buying second hand and exploring different insurance/warranty plans.
*Any information herein is not intended nor does it constitute financial advice. The Content is for informational purposes only.