The average price of a new car financed through WesBank in January 2021 was R358,390.
The financial services company shared this figure as part of its analysis on how much it costs to own and maintain a car in South Africa.
This price figure is up from R327,723 in January 2020, said the financial services provider.
R358,390 gives you access to an excellent range of options in South Africa, including the:
- Ford Fiesta 1.5TDCi Trend
- Suzuki Swift 1.4T Sport Auto
- Renault Captur 88kW Turbo Dynamique
As WesBank provides car financing, the average new car price it presented is based on the finance plans they have issued to customers.
These will include specific payments terms, interest rates, deposit amounts, and potential balloon payments.
To see how much the monthly installments are if you finance an “average new car”, we used the following parameters:
- New Car Price – R358,390
- Payment Term – 60 months (5 years).
- Interest – The rate was set at 9%.
- Deposit – A 10% deposit was put down.
- Balloon – No balloon payment was used.
- Extras – No optional extra were fitted to the cars.
The monthly payment based on the above comes out at R6,790.
How much you need to earn
To calculate how much you need to earn to afford this installment, we can look to guidelines from banks and finance houses.
It is generally recommended that you do not spend more than 30% of your annual gross salary when buying a new car.
It is also recommended that a car buyer does not spend more than 20% of their gross monthly income – what they earn before deductions – on financing a car.
This works outs to a gross monthly salary of R33,950 to take care of a R6,790 finance payment.
However, this is only part of the story.
A gross salary of R33,950 ends up being R27,435 after taxes.
You will then have to factor in insurance payments and fuel costs when running a car.
Using an example amount of R1,500 on petrol and R1,000 on insurance per month, your “total car expense” is R9,290 per month.
This is 34% of your after-tax salary.