Buying a car in 2025? We've got simple tips on budgeting, loans, and insurance to make owning your dream car easier on your wallet.
The New Year’s here, and if buying a car is on your 2025 to-do list, it’s time to start thinking about your finances. Whether you are after a zippy little hatchback, a hardworking bakkie, or an SUV with room for the whole crew, these tips will help you get on the road without your wallet taking a hit.
1. Start with a realistic budget
Setting a budget that works for you is the first step to buying a car without blowing your finances. In South Africa, it’s not just about the sticker price – things like insurance, fuel, and maintenance can quickly add up. Take the VW Polo Vivo, for example – it’s one of SA’s most popular compact cars, but owning one could cost you anywhere from R8,500 to R9,500 a month when you factor in repayments, insurance, fuel, and servicing.
Not sure where to begin? A handy rule is to keep all car-related expenses under 15% of your monthly income. So, if you’re earning R30,000 a month, aim for car costs – including instalments, fuel, and insurance – that stay below R4,500. It’s a simple way to make sure your car fits into your life without stretching your wallet too thin.
2. Understand loan options and interest rates
For most South Africans, buying a car means taking out a loan – but not all financing options are created equal. Knowing how they work can help you save money. With the prime lending rate sitting at 11.50%, your interest rate plays a big role in what you’ll pay each month.
Shorter loan terms usually mean higher monthly repayments, but they cost you less in the long run because of lower interest charges. On the flip side, balloon payments can make your monthly instalments more affordable, but you’ll need to budget for a big lump sum at the end. Take the time to compare your options and figure out what makes the most sense for your wallet.
3. Save for a deposit
Saving up for a deposit can go a long way in making your car more affordable. Even just 10–20% of the car’s price can lower your loan amount and save you a ton of interest. For example, if you’re eyeing a car that costs R300,000, a 10% deposit means R30,000 less to borrow – and smaller instalments that are easier to handle.
To make saving a bit easier, open a dedicated savings account and set up automatic transfers each month. Cutting back on extras like takeout or subscriptions can also add up quicker than you think. Got a year-end bonus or stuff lying around you don’t use anymore? Put those to work for your deposit too!
4. Buy with long-term value in mind
It’s easy to be tempted by the flashiest car you can afford, but thinking about long-term value usually pays off. Things like fuel efficiency, reliability, and maintenance costs can make a big difference to your budget over time.
Take fuel-efficient cars like the Suzuki Swift or Toyota Starlet, for example – they can save you hundreds of rands every month, especially with petrol prices often hovering over R23 per litre. Going for a slightly older or pre-owned car is another smart move. You’ll avoid the big depreciation hit that comes with buying brand-new, while still getting great value.
5. Consider insurance costs early
Car insurance is a must-have in South Africa, with risks like theft, accidents, and uninsured drivers on the road. Getting quotes early is a smart way to understand the real cost of owning a car and avoid any surprises. Your premium will depend on things like your car’s value, your driving history, and the type of cover you go for. Comprehensive insurance, for instance, costs more but gives you way better protection.
Shopping around and comparing quotes from different insurers is an easy way to find the right fit for your budget. These days, many insurers let you get instant quotes online, so it’s super quick to factor insurance into your car-buying plans.
6. Explore less traditional financing options
A traditional car loan isn’t your only option when it comes to buying a car. Leasing and rent-to-buy options are becoming more popular in South Africa. Leasing gives you lower monthly payments and the chance to drive a new car, but you won’t own it at the end. Rent-to-buy, on the other hand, lets you eventually own the car, though it often costs more in the long run.
If you’re thinking about these alternatives, take some time to weigh the pros and cons and see what works best for your goals and budget.
Buying a car is a big deal, but with the right planning, it doesn’t have to be stressful. By setting a realistic budget, exploring all your financing options, and thinking about long-term value, you can kick off the new year with a car that suits your lifestyle and your wallet.
Got your eye on your dream car? Protect it with a quick, personalised car insurance quote from Naked – so you can hit the road feeling secure and ready for the journey ahead.
