Brian Joss –
The day you sign for your first set of wheels is almost like a rite of passage into true independence. Most people feel an incredible sense of freedom when they realise that they will never have to ask someone for a ride again, or queue at a bus stop or taxi rank. For many, a car represents the first large purchase they will make, and this means that some serious thought should be given to the type of car selected and the cost implications of this significant investment.
Cars are often emotional purchases; a sleek sports car is often on the wish list of most newbie drivers, but frugality and practicality usually prevail. The number of options available can also be a little bewildering for first-time buyers, but each comes with a set of pros and cons, and realising this will help you pinpoint the best choice for lifestyle.
“What many people miss when making the decision to buy a car is that there are two sets of costs that accompany car ownership,” says Des Fenner, General Manager at Datsun South Africa. “They are commonly referred to as fixed and running costs.
“Fixed costs are what you pay to own the car, whether or not you ever take it out of your garage. These include insurance premiums, interest charges (if the car is financed) depreciation, VAT and the various administration fees associated with a vehicle purchase. The running costs are the variable costs such as fuel, maintenance, repairs, e-tolls, parking fees, licensing, and even traffic fines. Doing a proper estimation of these costs should give you an idea of what you can afford.”
The good news is that fixed costs usually decrease with time: depreciation is generally less each year, you can request cheaper insurance premiums, you only pay administration fees once, and, if you pay off the car, the monthly payments will cease.
Running or variable costs tend to rise the longer you own a car. Usually, the increase in running costs is outweighed by the decrease in standing costs, so, overall, the car is less costly to own and operate if you drive it responsibly.
“However, there is a caveat,” says Mr Fenner. “A car with a performance engine will start to use a lot more fuel as the engine ages, and the maintenance costs can get steep.”
When you consider the costs of ownership, buying a reasonably priced, fuel efficient car is the way to go, especially for students and young professionals aiming to break through to complete financial independence. While owning a sporty car is fun for the first few months, enthusiasm will soon wane when the fuel bills, maintenance costs and repayments start eating into your lifestyle. For example, for every R100 000 you finance on a car, you can expect to pay around R2 500 per month, depending on the term and interest rate. In addition, your insurance and fuel costs will increase in proportion to engine size.
In comparison, a compact, but stylish brand new entry level ‘city car’ is much more affordable. The Datsun GO, for instance, was declared by the 2015 Kinsey Report as having the most affordable parts basket in its category, driving maintenance and repair costs down. And at a listed retail price of R102 500 when the study was conducted, this makes the model SA’s most economical new car.
“It’s not advised to spend R2 000 to R4 000 more on a larger, flashier car every month, because the money is simply wasted,” says Mr Fenner. “If you invested R2 000 for 48 months instead of spending it on a gas guzzler, you would amass R112 000 – almost enough to buy your next car for cash!”
So, before you sign on the line for a car, crunch the numbers. Resist the urge to splurge on a mobile money pit, and get a car that can get you from A to B in comfort and style without breaking the bank.