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Cape Town - Many South African consumers are still under financial pressure and the costs involved in owning and running a car can play a major role in an individual’s monthly expenses.
“The current low interest rate environment means the car’s installment tends to make up less than half of an owner’s total monthly mobility costs, something which not everybody is fully aware of when buying a new car," according to Chris de Kock, executive head of sales and marketing at WesBank.
"The significant increases in the price of fuel, insurance premiums that increase annually as well as the cost of maintaining the car, mean that it is very important to budget carefully, for the total mobility cost when planning to buy a car.”
WesBank provides various online calculators in order to help the consumer with the different areas of budgeting.
These calculators include:
* The WesBank Monthly Affordability Calculator, which helps to determine monthly expenses and what someone can afford;
* The Vehicle Purchase Price Calculator, which calculates the maximum cash price of the car someone should buy;
* The Vehicle Repayment and Insurance Calculator, which calculates the monthly installment as well the various insurance product premiums.
“There are four factors affecting your monthly mobility cost. These can be broadly be categorised into fuel costs, monthly instalments, running and maintenance costs," said De Kock.
The most significant change in the monthly "mobility cost basket" comes from the fuel price.
Over the last few years, the rising fuel price has resulted in this becoming one of the biggest expenses associated with owning a car.
According to WesBank calculations, using a prescribed set of parameters, the average monthly fuel expense has risen from R1 421.00 in 2010 to R2 275.00 in 2013, a staggering increase of 60%.
The two most important factors in managing your monthly fuel bill, according to De Kock, are firstly buying a car that is fit for purpose and secondly, your driving behaviour.
For example, if you are a high mileage driver, then choosing a car that is fuel efficient makes more sense than a high performance motor.
Fast acceleration and high speeds drastically increase fuel consumption.
Regarding monthly instalments, De Kock said these payments are obviously a large portion of the monthly expenses associated with owning a car.
While financing a car allows people to own a car that they would otherwise be unable to afford, it is important that these monthly repayments are manageable and fall within your budget.
Even though we are currently in a low interest rate environment, it’s also important to take into account how a rise in interest rates would affect your monthly instalments and whether you would still be able to afford the payments.
"If you find yourself unable to meet your monthly instalments, speak to the financing company sooner rather than later to discuss a solution,” said De Kock.
Maintenance costs are the actual costs that come directly when you use your vehicle, and include tyres, servicing and repair costs.
Keeping your car in good condition can help reduce the running costs of your vehicle.
Remember to service your car within the prescribed intervals and always service your car within your car’s manufacturing franchise.
Running costs include items like toll fees, annual vehicle licensing costs and potential fines.
De Kock noted that car insurance is vital in protecting you from potential financial catastrophe in the event of theft or a serious accident.
“Most importantly, ensure that your car is comprehensively insured at all times," he said.
"If you feel that you are paying too much for your insurance, instead of cancelling your policy, speak to your insurance company to see if there are ways of reducing your monthly premium."
However, ensure that you fully understand how the changes to your policy affect the terms and conditions of your cover.
De Kock pointed out that opting for higher voluntary excess payments in order to reduce your monthly premiums may seem like an attractive option.
However, this leaves you vulnerable in the eventuality of a serious accident, where the claim and subsequent excess payment would result in a financial shock to your monthly budget.
“Spending some time focusing on each of these factors will enable you to better manage the monthly expenses of owning a car, which is essential in the current market conditions,” concluded De Kock.
- Fin24
“The current low interest rate environment means the car’s installment tends to make up less than half of an owner’s total monthly mobility costs, something which not everybody is fully aware of when buying a new car," according to Chris de Kock, executive head of sales and marketing at WesBank.
"The significant increases in the price of fuel, insurance premiums that increase annually as well as the cost of maintaining the car, mean that it is very important to budget carefully, for the total mobility cost when planning to buy a car.”
WesBank provides various online calculators in order to help the consumer with the different areas of budgeting.
These calculators include:
* The WesBank Monthly Affordability Calculator, which helps to determine monthly expenses and what someone can afford;
* The Vehicle Purchase Price Calculator, which calculates the maximum cash price of the car someone should buy;
* The Vehicle Repayment and Insurance Calculator, which calculates the monthly installment as well the various insurance product premiums.
“There are four factors affecting your monthly mobility cost. These can be broadly be categorised into fuel costs, monthly instalments, running and maintenance costs," said De Kock.
The most significant change in the monthly "mobility cost basket" comes from the fuel price.
Over the last few years, the rising fuel price has resulted in this becoming one of the biggest expenses associated with owning a car.
According to WesBank calculations, using a prescribed set of parameters, the average monthly fuel expense has risen from R1 421.00 in 2010 to R2 275.00 in 2013, a staggering increase of 60%.
The two most important factors in managing your monthly fuel bill, according to De Kock, are firstly buying a car that is fit for purpose and secondly, your driving behaviour.
For example, if you are a high mileage driver, then choosing a car that is fuel efficient makes more sense than a high performance motor.
Fast acceleration and high speeds drastically increase fuel consumption.
Regarding monthly instalments, De Kock said these payments are obviously a large portion of the monthly expenses associated with owning a car.
While financing a car allows people to own a car that they would otherwise be unable to afford, it is important that these monthly repayments are manageable and fall within your budget.
Even though we are currently in a low interest rate environment, it’s also important to take into account how a rise in interest rates would affect your monthly instalments and whether you would still be able to afford the payments.
"If you find yourself unable to meet your monthly instalments, speak to the financing company sooner rather than later to discuss a solution,” said De Kock.
Maintenance costs are the actual costs that come directly when you use your vehicle, and include tyres, servicing and repair costs.
Keeping your car in good condition can help reduce the running costs of your vehicle.
Remember to service your car within the prescribed intervals and always service your car within your car’s manufacturing franchise.
Running costs include items like toll fees, annual vehicle licensing costs and potential fines.
De Kock noted that car insurance is vital in protecting you from potential financial catastrophe in the event of theft or a serious accident.
“Most importantly, ensure that your car is comprehensively insured at all times," he said.
"If you feel that you are paying too much for your insurance, instead of cancelling your policy, speak to your insurance company to see if there are ways of reducing your monthly premium."
However, ensure that you fully understand how the changes to your policy affect the terms and conditions of your cover.
De Kock pointed out that opting for higher voluntary excess payments in order to reduce your monthly premiums may seem like an attractive option.
However, this leaves you vulnerable in the eventuality of a serious accident, where the claim and subsequent excess payment would result in a financial shock to your monthly budget.
“Spending some time focusing on each of these factors will enable you to better manage the monthly expenses of owning a car, which is essential in the current market conditions,” concluded De Kock.
- Fin24
