How much you can afford to spend on a car – Based on your salary
Financial experts recommend that you do not spend more than 20% of your gross monthly salary on vehicle finance payments.
For example: If you earn R20,000 per month before tax and other deductions, you should not spend more than R4,000 per month on vehicle instalments.
This formula is a rough guideline only, however, and does not take into account your other monthly expenses – think bond payments, medical aid, and retirement savings.
Additionally, it does not factor in the cost of car insurance or fuel, which can add several thousand rand per month to your total cost of vehicle ownership.
How much you can spend
To provide a guide of how much you are advised to spend on vehicle finance payments using the “20%” rule, we created the table below.
The table provides an overview of how much you should spend on a vehicle instalment, based on your monthly gross salary.
It also includes the price of the car you can afford with this instalment.
It must be noted that this is not intended as financial advice.
| Car Price | Monthly Instalments | Required Salary |
|---|---|---|
| R100,000 | R1,962 | R9,810 |
| R200,000 | R3,830 | R19,150 |
| R300,000 | R5,698 | R28,490 |
| R500,000 | R9,435 | R47,175 |
| R750,000 | R14,105 | R70,525 |
| R1,000,000 | R18,776 | R93,880 |
| R2,000,000 | R37,459 | R187,295 |
Monthly payments
To calculate the price of the car you can afford with a particular monthly instalment, we used the formula below.
- Car Price – Total Price
- Payment Term – 60 terms (5 years)
- Interest – 9%
- Deposit – 10%
- Balloon – No balloon payment
- Extras – No optional extras
Examples of cars
The list below details the new cars you are able to purchase in the various price brackets.
Bajaj Qute – R75,000
Hyundai Grand i10 – R199,900
Haval Jolion – R299,900
Mazda CX-30 – R499,000
Ford Ranger Thunder – R744,100
BMW 420i Gran Coupe – R937,452
Range Rover Sport HSE – R1,988,600
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