By: Brina Biggs
With a new year and new beginnings, some people often start the year with the purchase of a car. Buying a new car is exciting, but without smart financial planning, it can quickly turn into a costly mistake. This is why South Africans need to be educated on how to make budget-savvy decisions that save money and protect their investment.
According to the Automobile Association of South Africa, a staggering 65% of the country’s approximately 11 million registered vehicles are uninsured. This leaves millions vulnerable to financial ruin in case of accidents or theft.
Don’t spend the full credit available to you. Think beyond the price tag—consider the additional vehicle ownership costs like insurance, maintenance, and fuel as well as the potential for an interest rate increase and the impact on your vehicle premium. Smart planning before you enter into a new financial commitment can save you thousands in the long run.
Top 5 budget-savvy car buying tips:
- Set a realistic budget: Look beyond the purchase price—factor in expenses like insurance, licensing, and ongoing maintenance.
- Choose fuel efficiency over flash: A fuel-efficient vehicle will save you thousands over time compared to a gas guzzler.
- Shop around for financing: Interest rates vary—compare options to avoid paying more than you need to.
- Consider the total cost of ownership: Think long-term—repairs, servicing, and depreciation all impact your wallet.
- Insurance is non-negotiable: Protect your investment and avoid financial distress in case of theft or accidents.
We encourage South Africans to embrace smarter car ownership habits, such as buying a pre-owned vehicle with a good track record, negotiating better financing terms, and leveraging insurance bundles for added savings. Small changes in how you approach car ownership can lead to significant long-term financial benefits.
Being financially savvy doesn’t mean falling for deals that are too good to be true. The reality is, cheap can be expensive. It is important for consumers to ensure they purchase their vehicle from a reputable dealership or, if buying privately, to have the vehicle thoroughly assessed by a qualified mechanic and ensure to do a roadworthy assessment of the vehicle before finalising the purchase. But more than that, making sure this big-ticket item is insured is crucial as bad things happen to good people. In fact, according to Budget Insurance data, susceptibility to unexpected, expensive days from a vehicle perspective includes:
- Monday: When the highest number of break-ins occur.
- Tuesday: When you are most likely to hit a pothole and damage your tyres.
- Friday: Watch out for car theft.
- Saturday: When car accidents are most likely to occur.
- Sunday: When smash-and-grab criminals usually pounce.
Given South Africa’s deteriorating infrastructure, high crime rates, and tight economic conditions, car ownership presents significant risks. Our deteriorating roads increase the likelihood of accidents and costly repairs, while the high prevalence of vehicle theft and hijackings underscores the need for comprehensive insurance coverage. Economic pressures often force consumers to cut back on essential protections, leaving them vulnerable to financial setbacks.
Many people cut insurance when budgets are tight, but that’s a big mistake. Without coverage, an accident could wipe out your savings. Having insurance is a small price to pay for peace of mind.
* Biggs is a senior manager at Budget Insurance.
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