We understand that life can get expensive. When considering your monthly payments that includes rent or bond repayments, groceries, rates, taxes, education and general living expenses. Therefore, having a budget in place, that clearly lists your monthly expenses is important. This will help you ensure that you don’t overspend, especially when choosing car repayments that fits within your budget.
If numbers aren’t your strong point and you’re unsure of where to start with the process, there are various tools available to assist you in working out your car repayments and associated costs.
These calculations will take into account important factors, such as the deposit amount, the payment term, the balloon payment (if this applies) including the interest rate, to determine your estimated monthly repayment.
As a general rule, experts recommend that the cost of car instalments should not exceed 15% of your monthly gross salary, or 20% of your monthly net salary.
There are also a number of external factors that need to be considered, as part of your monthly expenses associated with your car. These include insurance, mechanical warranty, cost of services, general maintenance and petrol.
Your monthly income, combined with your living expenses, will determine the type of car you can afford; where a pre-loved smaller car with a small engine, that is light on fuel are often more practical and affordable.
An interesting fact to note, is that older cars depreciate at a slower rate. This means that when or if you decide to sell your car at some point in the future, you will be able to get a higher return on the sale, if it is well maintained.
If you are looking for a car and feel that it is way out of your budget, there are alternatives available.
Earn-a-Car can assist you in finding a car that is financially viable, with our easy rent-to-buy vehicle finance option. You do also have the opportunity to earn additional cash with our referral programme.