An advertised price of ‘Only R399 900’ might sound like the bargain of a lifetime, but plan carefully to avoid the R399 900 bargain becoming a burden for a lifetime.
The sticker price of any vehicle, new or used, only tells in part how your bank account is going to suffer for years to come. There are many hidden costs at every chapter of the car ownership journey.
Do not solely focus on the advertised price or monthly instalments. Numerous hidden costs can significantly impact your budget, and you need to take this into account when deciding to buy a new vehicle to avoid unpleasant financial surprises later down the line.
Vehicle Insurance
Insurance is frequently disregarded when planning a new car budget, but if you’re financing your purchase, it’s crucial and often required. Your age, driving history, the make and model of the car, and your location all affect the price. Your insurance rate may also vary depending on whether you plan to use the car for business or pleasure.
Example: A 28-year-old buyer in Johannesburg purchasing a new Toyota Corolla Cross could pay anywhere from R900 to R1 500 per month for comprehensive insurance. Sportier or luxury models like the VW Golf GTI or BMW 3 Series can exceed R2 000 monthly.
On The Road Fees (OTR)
Dealerships charge a one-off on-the-road fee, which is not included in the advertised vehicle price. This covers administrative tasks such as registration, license plates, number plates, and vehicle delivery inspection.
Example: You might see a car advertised for R300 000, but the OTR fee could add an extra R4 000 to R7 000, pushing up the actual cost.
Licensing and registration
The weight and type of your vehicle determine annual vehicle license fees. Registration is typically covered in the OTR fee, but annual renewals are your responsibility thereafter.
Example: A mid-size SUV like the Hyundai Tucson could cost around R1 200 to R1 800 annually for a vehicle license disc, depending on the province.
Interest rates and finance charges
Unless you’re paying cash, buying a car on finance includes interest over the repayment period. The interest rate you get will depend on your credit score and whether you choose fixed or linked rates.
Example: Financing a vehicle worth R250 000 over 72 months at 12% interest could mean paying over R90 000 in interest alone, making the total repayment closer to R340 000.
Fuel costs
Fuel prices in South Africa are volatile and continue to fluctuate monthly. The type of vehicle you buy will significantly influence your ongoing fuel spend, especially with larger engines or less fuel-efficient models.
Example: A compact hatch like the Suzuki Swift 1.2L (average 4.9l/100km) will cost considerably less to run compared to a Toyota Fortuner 2.8 GD-6 (average 7.9l/100km). Over a year of average driving (15 000km), the difference could be R5 000 or more in fuel costs.
Maintenance and service plans
New cars typically come with a service or maintenance plan, but once this expires, you’re responsible for upkeep. Even under warranty, items like brake pads, wipers, and tires are often excluded. Maintenance plans are more expensive in general.
Example: Replacing four tires on a BMW X3 could cost R12 000, while a basic oil service for a VW Polo might still be R1 500 to R2 000 out of plan.
Depreciation
Cars lose value the moment you drive them off the lot. Some vehicles hold their value better than others, but depreciation is a real cost when it comes time to sell or trade in your car. Some vehicles experience a greater decline in value over time than others. Brand, model, colour, and specification all influence depreciation curves.
Example: A new car that costs R400 000 today could be worth R260 000 or less after three years – a 35% loss in value.
Traffic fines and tolls
Ongoing running costs also include potential fines and e-tolls, especially in provinces like Gauteng. If you’re a regular commuter, these costs can add up quickly.
Example: If you travel daily on highways with toll gates, it could quickly add up to a lot of money.
Extended warranties and added extras
Some dealers will try to upsell you extended warranties, paint protection, tire and rim insurance, or tracking systems. While these can add value, they also increase your overall cost.
Example: A tracking device subscription may cost R150 to R250 per month, and an extended motor warranty could add R8 000 to R15 000 to your total deal.
Final thoughts
Understanding the hidden costs of buying a car in South Africa helps avoid nasty surprises and ensures a realistic budget. Always ask the dealer for a full breakdown of additional fees and evaluate the long-term cost of ownership, not just the purchase price.
A well-informed buyer is less likely to fall into financial traps and better equipped to choose a vehicle that fits their lifestyle and, most importantly, their pocket.
