If you can spend R1 million on a car, many will say you have officially “made it” in life.
The key word here is “afford” – and financial experts advise that you do not spend more 20% of your gross monthly salary on car finance payments.
To find out exactly how much these monthly payments would be, and how much interest you would pay in total to own one of these highly-desirable rides, we produced the calculation below.
For the purpose of this article, we will use the following scenario.
You are in the market for a new Toyota GR Supra/BMW M2 and have found a deal where the car is on offer for a price of R1 million.
The car will be purchased using a finance agreement from a bank, which will be paid back over five years.
To lighten the monthly payments, you will also put down a deposit of 10%.
This is structured as follows:
- New Car Price – R1,000,000
- Payment Term – 60 months (5 years)
- Interest – 9%
- Deposit – 10% (R100,000)
- Balloon – No balloon payment
- Extras – No optional extras were fitted
How much you pay back
Using the deal terms above, you will be taking out finance on an amount of R900,000. (The R1 million car price minus your 10% deposit.)
This will see you paying back R18,776 per month in finance payments over the next five years.
In total, you will pay R221,247 in interest – with the total cost of the finance agreement, including admin fees, sitting at R1,126,000.
How much you pay back with no deposit
If you decided you to buy the car with zero deposit, your monthly premium and total interest amount will both be higher.
In this scenario, you would pay back R20,852 per month in car finance payments.
The total amount of interest you will pay is R245,797.