It will cost approximately R11,167 per month to drive the entry-level VW Polo 70kW in South Africa if you buy it on a finance plan for R348,200 with a 10% deposit.
Over the course of a five-year contract, the hatch will run up a total bill of R670,020, which includes finance costs, fuel and parking fees, insurance, long-term maintenance, and unforeseen expenses such as emergency repairs, according to research by Naked Insurance.
Naturally, the monthly payment to the finance provider is the most expensive, followed by the provision for unexpected repairs, and then fuel and parking fees.
“When we add the numbers together, we can see that driving a modest car will cost you more than R134,000 a year if you travel just 1,000 kilometres a month,” said Naked co-founder Ernest North.
“We estimate that once your car is paid off in five years’ time, it will be worth around R165,000 — so your net costs for owning a car will amount to around R505,000. ”
The detailed monthly expenses for buying and running a VW Polo, as calculated by Naked, are as follows:
|Car payment at 13% interest
|Services and unexpected maintenance
|Fuel and parking
|Long-term maintenance (monthly average)
|Total cost per month
|Total cost after 60 months
Make your money go further
The single biggest factor that contributes to your monthly car spend is the price of the vehicle itself, which is determined by numerous elements such as the brand, the specific model, its engine and features, and whether it is new or pre-owned.
To keep the cost low, it’s better to look at the more affordable options in a manufacturer’s catalogue, such as the Polo instead of the Golf, or go to the used market where there are generally more options available in a wider price bracket.
You can also put down a bigger deposit upfront, and try to negotiate a better interest rate with your finance provider.
To reach the Polo’s monthly cost of R7,222, Naked used a deposit of 10% on a brand-new car at an interest rate of 13% over five years.
To work out your approximate monthly fuel bill which is a vital part of car ownership, you can look up the fuel consumption for the vehicle you drive and approximately how many kilometres you travel each month.
If, in the case of the Polo, your car consumes 5.3l/100km and petrol costs R23 a litre, it will cost you around R1,150 to travel 1,000 kilometres.
However, it’s important to keep in mind that petrol prices fluctuate each month based on the value of the rand and international oil prices, so what you spend in January may not be the same as what you will spend in February.
When it comes to insurance, your lender will require that you get comprehensive coverage, and to find the best deal, make sure to get several quotes from different insurance providers to see what they’ll cover and at what cost.
Insurers determine your premium by evaluating your individual risk profile, which includes factors such as the make and model of your car, your age, where you live, whether you already had insurance before, and numerous other components, so prices tend to vary between different individuals.
Even if you are not financing the car, insurance is essential to protect yourself from loss and liability.
Just be sure to read the fine print regardless of whether you’re paying cash or getting a loan.
Lastly, the cost of regular servicing and maintenance can not be forgotten when working out what you can spend on a car.
When buying new or certified pre-owned, the vehicle will generally come with a service/maintenance plan that covers routine items such as oil and filters.
However, you’ll still need to budget for expendables like brake pads, windscreen wipers, and tyres – which usually average roughly 2% of the car’s value each year, or about R6,900 for your R348,000 Polo.
If the car does not have a warranty or service plan, you should bank on spending a minimum of R7,500-15,000 per year for services and the unforeseen breakdown of major parts. How much it will cost will be influenced by the age of the vehicle and how much you drive.
“Given that most people’s salaries are not keeping up with inflation, it makes sense to be cautious in your budgeting, rather than splashing out on the latest and best model,” said North.
“Leave a bit of a cushion in your budget to provide for petrol price increases, higher insurance costs, and rising maintenance costs.”