The Real Monthly Cost of Owning a Car Goes Well Beyond the Instalment

Ask most people what their car costs them and they will quote the instalment. It is the figure on the finance agreement, the debit order that leaves the account on the same day every month, and the number the sales conversation revolves around. It is also, for almost every driver, well under half of what the car actually costs. The rest is spread across fuel stops, insurance debits, service invoices and a loss of value that never appears on a statement at all.

Adding it all up is not difficult. It just takes a few honest numbers.

The instalment, and what sits inside it

The instalment repays the amount you financed plus interest over the term. The amount financed is the price of the car less any deposit or trade-in, so a lower purchase price lowers both the instalment and the total interest paid. A balloon payment reduces the monthly figure but defers a lump sum to the end. The interest rate, set relative to prime according to your credit profile, and the term you choose complete the picture: a longer term lowers the instalment but raises the total interest paid. This is the one line most buyers already know, but it pays to understand what is inside it.

Fuel or electricity

For most South African drivers, fuel is the second-largest cost and the most variable. It depends on your kilometres, the car's consumption and a pump price that changes monthly. Estimate it from your realistic monthly distance and a consumption figure a little above the official one. An electric car moves this line onto your electricity bill, usually at a lower figure per kilometre if you charge at home. A hybrid sits between the two, cutting fuel use most in town. Whatever powers the car, revisit this line whenever the pump price changes, because it is the one that can move your monthly total the most.

Insurance

A financed car must carry comprehensive insurance for the full term, so the premium is a fixed monthly cost from the first day. It is set by the car's value and repair cost, your profile and where the car is parked overnight. Get a quote for the exact variant before you sign, and consider credit shortfall cover, which protects you if the car is written off while you still owe more than it is worth.

Servicing, tyres and wear

If the car includes a service plan, scheduled maintenance is prepaid for the plan's length, and this line is small until it expires. If not, budget for each service. Tyres, brake pads, wiper blades and the occasional battery are yours regardless; larger wheels and performance tyres push this line up noticeably. A small amount set aside monthly covers it comfortably. The annual licence renewal, toll fees on routes you use often, parking and the odd fine are individually minor and collectively real, so give them a modest allowance too.

Depreciation, the cost you do not see

The gap between what you paid and what the car is worth when you sell or trade it in is, for most new cars, the largest cost of all. It is invisible month to month and painfully visible on trade-in day. Choosing a model with strong resale value, keeping a full service history and, above all, paying less to begin with are the levers you have.

That last point is where Car4Less makes its difference: every new car in the showroom is priced below the manufacturer's retail price, so the amount you finance, the interest you pay and the depreciation you eventually absorb all start from a lower base. The total-cost guide and the budget calculator on the site turn this list into a monthly figure you can compare across the cars you are considering.

• Guide: total cost of ownership →
• Try the budget calculator →