The car payment is the number people plan around. It is the wrong number. The true monthly cost of a car is the instalment plus insurance, fuel, maintenance, and licensing — and in South Africa those running costs routinely exceed the instalment itself. This guide walks through the correct budgeting method before you set foot in a showroom or respond to a classified ad.
The most common mistake is picking a car first and building a budget around it afterwards. You find something you like, work out what the monthly instalment would be, decide it is manageable, and sign. Two years later the interest rate has moved, the fuel price has jumped, and the car is consuming 35% of your take-home pay.
The correct sequence runs the other way: establish what you can spend on all car-related costs combined, subtract every running cost, and what remains is your instalment ceiling. Only then do you look at what that ceiling buys.
Banks and dealers will tell you what you qualify for — not what you can afford. These are different numbers. Qualifying for a R6,000 monthly instalment does not mean a R6,000 instalment fits comfortably in your budget once you add insurance, fuel, and maintenance.
Start with your net monthly income — take-home pay after tax, UIF, and pension contributions. If you have a partner and this is a household vehicle, include both incomes. Then subtract every fixed monthly expense that exists regardless of the car purchase.
Based on a single earner, R28,000 net monthly income
This person has R5,100 per month available for all car-related costs combined. Not R5,100 for the instalment — for everything. The instalment is one part of that total.
Before you can know your maximum instalment, you need to know what the car will cost to run every month. These costs exist whether you are making payments or not.
| Running cost | Typical monthly range (SA, 2025) | Notes |
|---|---|---|
| Comprehensive insurance | R900–R2,500 | Compulsory when financing. Varies by vehicle value, your age, address, and claims history. |
| Fuel | R1,200–R3,000 | Based on 1,500km/month at current SA fuel prices. Adjust for your commute. |
| Maintenance / tyres | R400–R1,000 | Averaged monthly. Includes service intervals, tyre replacement over time. Lower on newer cars with service plans. |
| Annual licensing fee (monthly equivalent) | R50–R150 | Divide annual licence disc cost by 12 to budget monthly. |
| Credit life insurance | R150–R400 | Mandatory on most finance agreements. Covers the outstanding balance if you die or become disabled. |
| Finance monthly service fee | R69–R150 | Bank administration fee charged monthly on the finance agreement. |
| Total running costs (typical) | R2,769–R7,200 | Wide range — fuel and insurance are the biggest variables. |
Using conservative middle estimates — R1,400 insurance, R1,800 fuel, R600 maintenance, R100 licensing, R250 credit life, R100 service fee — running costs for a typical SA vehicle total around R4,250 per month.
Subtract running costs from available budget:
An R850 monthly instalment over 60 months at a typical interest rate of prime plus 2% (currently around 13.25%) finances a vehicle of approximately R38,000–R42,000. That is the vehicle budget — before deposit.
WesBank advises that no more than half your total car budget should go towards the instalment — the other half should cover running costs. Applied to our example: R5,100 total budget means R2,550 maximum instalment. That is still a significant constraint on the vehicle price, but more realistic than the common error of treating the full R5,100 as instalment capacity.
The National Credit Act stipulates that total debt repayments should not exceed 30% of gross monthly income. For car finance specifically, a common benchmark is 10–15% of gross income for the instalment alone. Use these as sanity checks against your own calculation.
A 10% deposit on a R150,000 vehicle reduces the financed amount to R135,000 and lowers your monthly instalment by roughly R300–R400 depending on term and rate. It also signals creditworthiness to the bank, which can secure a better interest rate. A 20% deposit makes a meaningful difference to long-term cost. No deposit means higher instalments, higher total interest paid, and a vehicle worth less than the outstanding loan balance for most of the finance term.
A longer term (72 months vs 48 months) lowers the monthly instalment but substantially increases total interest paid. On a R150,000 vehicle at 13% interest, the difference in total interest between a 48-month and 72-month term is approximately R18,000–R22,000. Lower monthly payment, significantly higher total cost. If you cannot afford the instalment on a 60-month term, the vehicle is outside your budget — extending to 72 months is not a solution.
SA car finance is typically offered at prime plus a margin. Prime rate moves with SARB monetary policy decisions. A vehicle financed at prime plus 2% today will cost more in monthly payments if prime increases by 1% next year. Build a buffer into your instalment ceiling — do not finance at the absolute ceiling of your affordability. A 1% rate increase on a R150,000 loan adds roughly R80–R100 to your monthly instalment.
If you have an existing vehicle to trade in, its value reduces the amount you need to finance. Get a trade-in valuation from WeBuyCars or at least two dealers before you negotiate — dealers often offer below-market trade-in values, particularly when you are simultaneously buying. Know the market value before you walk in.
For the same monthly instalment, a used car buys you more vehicle than a new one. A new car loses 15–20% of its value in the first year of ownership. That depreciation is absorbed by the first owner — buying a two-year-old car means someone else has absorbed the steepest part of the depreciation curve.
Used cars also carry lower insurance premiums (the vehicle is worth less), no carbon tax on the purchase price, and a wider selection at any given price point. The tradeoffs are the absence of a manufacturer's warranty, potentially incomplete service history, and the risk of hidden faults — which is exactly what the RSA Vehicle Guide inspection process is designed to address.
Vehicle leasing is more common in business than personal use in South Africa. Under a lease, monthly payments are typically lower than finance instalments for the same vehicle, and maintenance is often included. At the end of the lease term, you hand the car back — you do not own it. For individuals who want to own an asset, buying makes more sense over three years or more. For businesses, leasing can offer tax advantages not available to private buyers.
Three costs consistently catch SA buyers short because they seem distant at purchase time:
Work out what you have available after all existing expenses. Subtract realistic running costs. What remains is your maximum instalment. Finance that number at a conservative term with a deposit, and choose the best vehicle that instalment buys — not the most expensive vehicle the bank will approve. The bank's approval ceiling is not your affordability ceiling.
The 10 checks where SA buyers lose the most money. Print it. Take it to the viewing.