Buying a car this year? If so, you’re in good company. Latest stats from Naamsa, the National Association of Automobile Manufacturers of South Africa, show almost 600 000 consumers bought a new car in 2025, on the back of lower inflation and more affordable models.
If you’re in the market for a new set of wheels or selling your previous ride, we’ve got you covered.
The hidden costs: What you really pay for a car in SA
It’s easy to forget that your monthly car installment is only around 50% of the cost of owning a car. Here’s how to think about the running costs of a car:
- The rising cost of spare parts. Car repair costs are much higher than previously and it is harder to secure affordable parts. Previously, South Africa manufactured more vehicles locally, and vehicle parts were easier to source.
- Keeping up with fuel. South Africans do not need to be reminded of petrol prices. Recently, fuel prices have been on a downward trend, but it’s hard to say how long this will last. External factors such as geopolitical uncertainty, supply chain disruptions, and fluctuations in the rand's value mean this needs to be budgeted into monthly costs when considering a new car.
- On-the-road fees. These fees refer to the expenses the dealership will add to your invoice to cover licensing fees, number plates, servicing, etc.
- Car insurance. Your car insurance value might change if your new car’s market value is higher than that of your trade-in. Get an online car insurance quote.
You can estimate these costs to come up with a comprehensive car maintenance budget you know you can afford.
Trading in? Five ways to negotiate a better price
Most people accept the first offer they get rather than shopping around. Here are some more car trade-in tips to get the best deal:
- Do your homework. Know what your make and model of car is worth by researching online car retailers and a few local dealerships. You’ll be better prepared for negotiating a car price with this in hand.
- Set the stage. Property agents stage a home to improve the odds of a sale. Do the same with your car by investing in professional cleaning and repairing the nicks and scratches that appear over time. Having a full service history significantly impacts your car’s value.
- Bank on success. ‘Banking’ your trade-in is a term used in the car industry, which means you settle on the price of your old car first, before negotiating the new car’s price.
- No desperados. There are many ‘tricks of the trade’ that car salespeople employ to close the deal. Time pressure is one of them, with limited offers and ‘freebies’ being at the forefront. Don’t approach the negotiations desperate for a conclusion. Walk away if you must, until you are happy with the offer.
- Know your budget. Dealerships often only reveal the monthly repayment costs of the car you are interested in buying. Bear in mind that the longer you pay, the more you pay. Know your budget and stick to it. There’s an old rule of thumb you can use as a guide to calculate your car’s running costs: If your car loan is R3 000 per month, then budget another R3 000 per month for petrol, maintenance and car insurance.
Understanding car balloon payments: Debt trap or useful tool?
A balloon payment is a bulk payment that you make at the end of your car loan. They’ve become more common as consumers look for ways to make car purchases more affordable.
While it keeps monthly repayment costs more affordable and attractive, a balloon payment commitment can become a challenge in the event of an accident or if your car’s trade-in value is less than the amount of the balloon payment.
If your car has been written off, stolen or hijacked, and it is insured only for market value, you will end up owing the bank a lot of money, which you probably don’t have. So, you’re paying for a car that you’re not driving.
Thankfully, you can get shortfall cover to help. Not only can it cover the risk of balloon payment obligations in the event of theft or an accident, but you can also get top-up credit or credit shortfall cover for when you’re in a financial crisis. You can enjoy your new car without stress or anxiety.
Retail vs market value car insurance in South Africa: Which one should you choose?
Consumers often get confused between the retail and market value of a car. It’s important to know this in order to make sure you are sufficiently covered in the event of your car being stolen or written off.
Retail value. A car's retail value (which is typically the higher of the two values) is the average price a car dealer would charge to sell it. Simply put, it is the average price that a dealer would sell a car for – new or old - considering its age, condition, and mileage. What this means from a car insurance point of view is that if your car is written off in an accident or stolen, your insurance company will pay out the car’s retail value.
Reasonable market value. It is essential for short-term insurers to standardise how it equates the “reasonable market value” of vehicles since this can vary from vehicle to vehicle. For example, Santam’s comprehensive car insurance pays you the reasonable market value of your car.
Getting the right cover for your new wheels
Your car is one of your most expensive purchases, and you need to protect it. Most vehicle financing institutions insist on comprehensive car insurance to protect their risk. However, if you pay cash for your car, you have several options:
- Third-party-only car insurance, covering the amount you are legally liable for to another party, in the event of an accident;
- Limited fire and theft car insurance. This includes third-party cover benefits, but only if the loss or damage is due to fire, lightning, explosions, theft or attempted theft, and includes any liability relating to the vehicle;
- Comprehensive car insurance, offering complete cover as it includes accidental loss or damage to the vehicle and third-party cover.
Car insurance FAQ
How do I know if my cover is sufficient for a new car?
Many people are anxious that their insurance claim will not be sufficient to cover the cost of a replacement car. Santam offers comprehensive car insurance that includes a guaranteed value option to help car owners avoid any uncertainty regarding what the payout will be in the event of damage or loss to their vehicles. You will know exactly what you will be reimbursed.
Can I switch car insurers if I have vehicle finance?
Yes! You can switch insurers at any time. You might have opted to be insured with the bank that is financing your vehicle. Don’t feel obliged to stay with the insurance solution that doesn’t suit you. Get an online car insurance quote and compare.
How is my car insurance premium determined?
Insurance companies look at several criteria before determining what your premium will be. This includes:
- The make and model of your vehicle. Some cars are lower theft risk or are more expensive to repair than others.
- Your self-payment portion, or excess. The higher your excess, the lower your monthly premium.
- The type of car insurance you choose, e.g., comprehensive, as well for what usage it will be used e.g., private or business use, and who will be driving the vehicle.
Is it better to get comprehensive car insurance?
When it comes to getting complete peace of mind, comprehensive car insurance is the highest level of protection you can get for your vehicle. This is because it is the most extensive form of insurance cover that covers all bases and protects against unforeseen events. It is also the cover that financial institutions insist on to protect their assets. No matter what happens, you will know your investment is well looked after on and off the road.
When choosing an insurer, choose one that offers a policy tailored to suit your needs and your budget. The right insurer is not necessarily the one with the lowest premium, but the one that ensures you have adequate coverage at the lowest price. Also, remember that affordable does not equal cheap. Sometimes “cheap” ends up costing you more in the long run.