The Big Picture: Why Budgeting Matters

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If you’re anything like this writer, you’ve thought long and hard about buying your first car. 

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And while most of your thoughts might centre around the feeling of freedom and enjoying the open road while the wind blows through your hair, there’s more car ownership than that.

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Fuel, maintenance and car insurance should also form part of your car-buying budget. 

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Factoring these expenses into your finances will help you avoid unexpected costs, such as petrol costs, random breakdowns, or insurance claims.

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And, of course, one of the most crucial considerations is whether a new or used car is better. 

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A newer model means the latest tech and features, but a higher cost and higher depreciation rate. A second-hand vehicle is more affordable, but not as reliable. However, the choice will depend on you as a driver… and your budget, of course.

1. Know Your Numbers: How Much Can You Afford?

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According to this article from Mahindra, to qualify for a vehicle loan, one must have a minimum net monthly salary of R6,500 to buy a car in South Africa. 

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Should you be in the market to finance a vehicle, experts have noted that, in general, one should budget for between 15% and 20% of their total monthly income for their monthly installment, subject to their other financial obligations.

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An article by Autotrader said this recommended range is because “in many cases, a bank or money lender won't approve your vehicle finance application if this ratio is any larger than that.”

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In addition, to determine whether you qualify for vehicle finance, you’ll need a three-month bank statement and payslips as proof of income. 

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To calculate whether you can comfortably afford a car, consider your salary and savings as well as your your monthly expenses, such as bills (rent and utilities) and groceries. Doing this should assist you in budgeting and financial planning.

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Gearing Up: Essential Costs to Consider

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Don’t be someone who avoids putting together a budget. 

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Sure, it’s a painful reminder of how much money will be leaving your account. 

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But it’s better to have a realistic knowledge of your affordability. Besides, the rush of spending first and checking your balance later is a cheap thrill that can have costly consequences.

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So, when you own a car, add fuel, vehicle insurance and maintenance fees to your total expenses. These costs are like a Clicks’ special, except you get all four for exactly the price of four. 

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Insurance 101 for Young Drivers

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Many young drivers choose to insure their vehicles under their parents' or guardians’ policy. This means multiple car discounts for the original policyholder and avoiding expensive premiums for newbie car owners.

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But, affordable insurance is a thing, even for young drivers. 

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Motorists have the option of insuring their car under different insurance policies: third-party, third-party fire and theft, or comprehensive coverage. 

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1. Third-party insurance

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Sometimes called liability cover, third-party insurance covers damages to someone’s property, injuries or vehicle caused by you in an accident. 

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This policy does not cover your car since it is all about the other party (it’s even in the name, silly). On the plus side, it is the most affordable motor coverage option.

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2. Third-party fire and theft

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This policy is similar to the above but with the added protection of covering your car against perils like fire damage and theft/ hijacking. 

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3. Comprehensive coverage

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Comprehensive car insurance is the most encompassing vehicle protection policy offered in South Africa. 

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While it is more expensive, there is the comfort of knowing you are covered for everything. It covers you against third-party claims and protects your car in case of accidents, fire, theft, weather-related damage, windscreen and window repairs. 

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It also includes other benefits like roadside assistance, car hire and shortfall coverage. 

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Insurance providers like Pineapple offer budget-friendly premiums tailored to younger South Africans wanting to insure their cars for the first time. 

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For example, you can insure your Suzuki Swift from as little as *R23-ish a day (that’s around R690 monthly). Whereas Hippo noted that the average price of insurance for an under 25 for the same vehicle is about R1398 for female drivers and R1722 for males.

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Click here for a 90-second comprehensive car quote now! 

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And remember, car insurance premiums are risk profile-dependent. What does that mean? 

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Basically, your risk profile includes your age, insurance history, location (where the car is parked) and the car’s make and model. 

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These factors will determine whether you pay a low or high monthly premium.

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Another factor affecting your premium is the car insurance excess. This is the amount you pay out of pocket when you claim from your insurance after an accident or other covered event.

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Read up on it here: Understanding Your Risk Profile: Key to Getting the Right Insurance.

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Fuelling Your Freedom: Understanding Fuel Costs

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You don’t even have to own a car to know how serious fuel price discourse is. The news even has segments dedicated to reporting on the rise and fall of petrol prices! 

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So, it’s safe to say this is something you should be clued up about.

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Although there’s not much you can do about the actual cost of petrol, you can control how fuel-efficient your car is. Inflated tyres, smooth driving and acceleration, and turning off your A/C (air conditioning) can assist with fuel efficiency.  

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Additionally, we thought we’d do you a kindness by giving you a list of resources to help keep you abreast of petrol price changes, so here goes:

1. Fuel SA
2. Fillapp Fuel Alerts 
3. Fuel Retailers Association

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Alternatively, you can tune into your preferred news station or radio broadcast. As previously mentioned, they report on fuel prices and what motorists can expect to pay for a full tank of petrol.

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Keeping it Running: Budgeting for Maintenance

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If your car’s like a baby, the service visits are the equivalent of a routine check-up at the paediatric’s office. Luckily, service and maintenance appointments aren’t as frequent (did we just hear your wallet breathe a sigh of relief?), but are just as vital.

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Servicing is a series of maintenance procedures carried out at a service centre at a certain time interval. 

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It can range from minor service checks, which look after the small things in your vehicle (changing the oil and oil filters), to major ones, which entail a more comprehensive service and are far more focused. 

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The number one question motorists often ask themselves is, “When should I take my car for maintenance?” 

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The answer depends on the following factors:

• The vehicle’s age
• Your daily travelled distance 
• The surfaces and quality of the road you drive on

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Plus, how well you maintain your car will also play a big part in deciding when it’s time to take it for a service run.

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Research (a quick Google search) led us to an article by News24, which recommends carrying out minor services “every 10,000 to 15,000 kilometres, and major car services usually at around 30,000 to 45,000 kilometres.”

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However, this decision should be based on your car manufacturer’s recommendations. If you do not travel the above distances, you should still take your car in for a check-up at least once a year.

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And newer cars typically have a service light on the dashboard that lets you know when a service is due. Yes, those pretty lights aren’t just there for ✨aesthetic✨ reasons. 

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So, whenever your dash lights up like a Christmas tree, it’s vital to have enough saved up as a contingency fund for surprise service visits.

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Alternatively, you can buy a motor service plan or extend an already existing one. This is a monthly payment that helps should the service on your vehicle get a little too costly.

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All-in-all, following the recommended service plan will ensure your car’s safety and longevity.

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Budgeting Hacks for Young Drivers

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Between worrying about employment, keeping up with the latest TikTok trend, and still trying to have an active personal life… being a young person is tough. 

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Then, there are still car costs to consider on top of all that.

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So, here are some tips we hope will help you manage at least one thing: budgeting for your car.

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1. Side hustle. In this economy—where 1kg of honey costs R189.99 because basics, amiright?—a side hustle (a side job) is basically a must. This means more money than you’ll make at your corporate 9-to-5 alone, and these extra funds can come in handy when it’s time to budget for your first ride.

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2. Negotiate. Did you know that the Spanish word for business is ‘negocio’, and that’s exactly what you are to a lot of car dealerships? So, make your business work for you—don’t wait until you’re on Shark Tank to negotiate like a pro. Ask them for a good deal, and make sure you don’t budge until you’re comfortable with the offer on the table!

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3. Ask your parents for assistance (as an absolute last case resort). Not every parent has this luxury or can afford to assist, but if you’re one of the fortunate few, definitely consider asking your parents to help with a bill or two. This will help ease your financial burden because your salary can only stretch so far.

Here's Your Free First-Time Drivers Checklist

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FAQs About Budgeting for Your First Car

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What is the minimum credit score to buy a car in South Africa?

If you’re planning on financing the vehicle, finance houses and other lenders typically require a credit score of at least 660 for a car loan.

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What budget do I need for a car?

As previously mentioned, lenders prefer that you have a minimum salary of at least R6,500 to qualify for car finance in South Africa.

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Which car can I afford with my salary?

We’d love to tell you what you can and can’t afford, but that would be pocketwatching. Additionally, we’re not allowed to give financial advice, so note that this should 100% NOT be considered as such. 

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Seriously, this should not be considered financial advice!

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**As per BusinessTech’s 2023 article: The cars you can afford with your salary in South Africa right now.

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Here are some cars and their out-of-the-box price that you could consider if your salary is between **R15,000 – R17,000 

• the Suzuki S-Presso 1.0 GL (total cost of R169,900)
• the Suzuki Celerio 1.0 GA (R183,900).

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Here are some cars and their out-of-the-box price that you could consider if your salary is **R20,000

• the Renault Kwid 1.0 Climber (total cost of R209,999) 
• the Suzuki Ignis 1.2 GL (total cost of R217,900) 
• the Suzuki Swift 1.2 GL (total cost of R218,900)
• the Toyota Vitz 1.0 XR X-Cite (total cost of R219,900)

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Here are some cars and their out-of-the-box price that you could consider if your salary is between **R24,000 – R26,000

• the Suzuki Baleno 1.5 GL auto (total cost of R259,900)
• the Nissan Magnite 1.0 Acenta Plus (total cost of R263,100)
• the Mahindra XUV300 1.2T W4 (total cost of R267,999)
• the Volkswagen Polo Vivo hatch 1.4 Comfortline (total cost of R276,500)
• the Suzuki Fronx 1.5 GL manual (total cost of R279,900)
• the Chery Tiggo 4 Pro 1.5 LiT manual (total cost of R279,900)

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Here are some cars and their out-of-the-box price that you could consider if your salary is **R35,000

• the Toyota Urban Cruiser 1.5 XR auto (total cost of R369,900)
• the Hyundai Venue 1.0T Motion manual (total cost of R379,900)
• the Volkswagen Polo hatch 1.0TSI 70kW Life (total cost of R385,300)
• the Haval Jolion 1.5T Luxury (total cost of R385,550)
• the Peugeot 208 1.2T Allure (total cost of R389,900)
• the Honda BR-V 1.5 Trend (total cost of R389,900)

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Here are some cars and their out-of-the-box price that you could consider if your salary is between **R40,000 – R45,000

• the Volkswagen T-Cross 1.0TSI 85kW Comfortline (total cost of R456,100)
• the Toyota Corolla Cross 1.8 Hybrid XS (total cost of R476,600)
• the Omoda C5 1.5T 230T Lux (total cost of R477,900)
• the Audi A1 Sportback 30TFSI Advanced (total cost of R482,400)
• the Kia Seltos 1.5CRDi EX auto (total cost of R488,995)
• the Opel Mokka 1.2T Elegance (total cost of R489,900)

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Here are some cars and their out-of-the-box price that you could consider if your salary is between **R62,000 – R65,000

• the BMW 118d (total cost of R704,250)
• the Toyota Hilux 2.4GD-6 double cab 4×4 Raider auto (total cost of R704,300)
• the Audi Q3 35TFSI Advanced (total cost of R728,100)
• the Toyota Fortuner 2.4GD-6 4×4 (total cost of R731,100)

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Here are some cars and their out-of-the-box price that you could consider if your salary is between **R83,000 – R85,000

• the Ford Everest 2.0 BiTurbo 4×4 XLT (total cost of R913,400)
• the Toyota Crown 2.5 Hybrid E-Four (total cost of R918,900)
• the Mercedes-Benz GLA200d Progressive (total cost of R927,900)
• the Volvo EX30 Plus Twin Motor Performance (total cost of R935,900)
• the Lexus UX 250h SE (total cost of R946,200)

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Here are some cars and their out-of-the-box price that you could consider if your salary is upwards of **R100,000 (We see you, big baller!)

• the BMW M440i xDrive Gran Coupe (total cost of R1,413,966)
• the Jaguar E-Pace P300e AWD R-Dynamic SE (total cost of R1,613,000)
• the Land Rover Defender 90 D300 X-Dynamic HSE (total cost of R1,777,500)
• the Toyota Land Cruiser 300 3.5T GR-Sport (total cost of R2,095,100)
• the Porsche 911 Carrera 4 coupe (total cost of R2,300,000)
• the Bentley Continental (total cost of R5,120,000)
• the Ferrari Roma (total cost of R6,300,000)

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Alternatively, you can use an affordability calculator to determine what you can qualify for.

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What is needed when buying a car cash?

A lot! And all of it is covered in this News24 article. Basically, the steps are:

• Completing and inspection of the vehicle
• Checking the vehicle’s documents
• Proceeding with the intent to purchase
• Providing your documents (bank statement, recent active lease or rental agreement, motor vehicle registration/license documents, etc.)
• Completing the payment and collection
• Finalising the registration

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Can I get a car without a deposit?

According to dealership WP Motors, “Opting for financing that comes with a balloon payment allows you to get vehicle financing without deposit!” So yes, you can buy a car without a deposit. But, what you save upfront will be paid at the end of your finance term. Be wary of the T&Cs.