What does a car really cost — instalment, insurance, fuel — as a share of income?
The instalment is roughly half the story. Once insurance, fuel, maintenance and tyres join the stack, the real monthly cost of a financed car commonly lands at close to double the number on the finance contract.
One widely used convention keeps total car cost — everything, not just the instalment — under about 15% of monthly income. Measured that way, many cars that "fit the budget" on instalment alone stop fitting.
The full monthly stack
Take a worked example: R350,000 financed over 72 months at an illustrative 12.5%. The instalment comes to R6,933.91 a month. That is the number the dealership quotes — and it is where most car budgeting stops.
Now add what the car actually needs to stay on the road each month:
- Instalment: R6,933.91
- Comprehensive insurance: say R1,800 (financed cars are required to carry it)
- Fuel: say R2,800
- Maintenance, tyres and licensing averaged out: say R600
- Total: R12,134 a month — the instalment is only 57% of it
Over the 72-month term, those instalments alone add up to about R499,242 — roughly R149,242 of interest on top of the R350,000 financed. The running costs come on top of that again.
What a balloon payment actually does
A balloon payment does not remove any of the price — it defers a chunk of it to the end of the term. On the same R350,000 deal, a 35% balloon (R122,500) drops the instalment from R6,933.91 to R5,783.08. It looks like a saving of over R1,100 a month.
But the R122,500 is still owed in full at month 72 — and interest runs on the full outstanding balance for the whole term, including the part being deferred. Total paid, instalments plus balloon: about R538,882. That is roughly R188,882 of interest, against R149,242 without the balloon — about R39,640 more, for the same car.
At the end of the term the balloon typically gets settled in cash, refinanced into a new loan (more interest), or covered by trading the car in — which rolls the shortfall forward.
The cost nobody budgets: depreciation
A car loses value from the day it leaves the floor, and the loss is steepest early — exactly when the loan balance is at its highest, because early instalments are mostly interest. That combination is why a financed car can be worth less than what is still owed on it, especially with a balloon deferring capital to the end.
Depreciation never shows up as a debit order, so it never makes the budget. It shows up later, all at once — at trade-in time, or on the insurance payout after a write-off — as the gap between what the car fetches and what it cost.
The % of income measuring stick
Because the rand amounts vary so much between cars, a useful lens is total car cost as a share of monthly income. A common budgeting convention keeps that share — instalment, insurance, fuel, maintenance, everything — under about 15% of income. It is a convention, not a rule, but it gives the stack above something to be measured against.
On a R40,000 monthly income, 15% is R6,000 — less than the worked example's instalment alone. The full R12,134 stack is just over 30% of that income. Same car, same salary: the instalment-only view says it fits, the full-cost view says nearly a third of every month is driving away.
The number that changes decisions
None of this says what anyone can or cannot drive. It says the real number is knowable before signing: instalment plus insurance plus fuel plus upkeep, divided by income. Two cars with similar instalments can sit at very different shares of income once insurance and fuel enter — and the share is visible in five minutes of adding, not five years of hindsight. How the borrowing side of the maths works is covered in "How much interest does a personal loan really add up to?"
Terms used on this page
- balloon payment
- A lump sum deferred to the end of a finance deal. It lowers the monthly instalment, but interest runs on the deferred amount for the whole term.
Reviewed July 2026