The True Cost Of Buying A Car: A Detailed Breakdown


May 8, 2024
Team Pineapple

You never forget your first time; the anxious anticipation, exhilaration and build-up to the big moment are all but ingrained in your mind. 

That’s because buying a car, whether new or second-hand, simply never gets old. 

But beyond the thrill and the lure of a new vehicle lies a critical, often overlooked aspect: the true cost of car ownership. So, we at Pineapple took it upon ourselves to create this in-depth guide, where we delve into what it really means to own a car in South Africa.

But don’t worry, all the information is pineapple bite-sized, and easy to understand.

From the initial purchase price to the complexities of financing, depreciation, insurance costs, fuel expenses, and maintenance—we cover it all. 

Join us as we navigate these hurdles, helping you make an informed decision that balances excitement with economic wisdom.

Purchase Price

It should come as no surprise that not all cars cost the same. Due to factors like the vehicle’s make and model, prices will vary. And when you add a car’s age to the equation, there are even more costs to consider. 

New versus Used Cars

Buying a new versus a pre-loved car greatly influences the cost. 

The root cause of the pricing differences lies in the depreciation rates, warranties, and maintenance costs.

New cars, fresh off the dealership floor, are equipped with the latest features and a manufacturer's warranty. However, this also means a higher price and a steep depreciation curve.

A new car loses value the minute you drive it out of the dealership. 

New vehicles are said to even drop by as much as 15-20% of their value in the first year and around 30% by the end of the first year. In contrast, a used car, which has mostly already undergone this initial depreciation, will lose value at a much slower rate.

For example, this initial depreciation means buying a new car for R250 000 could result in a loss of around R75 000 in a single year!

Newer vehicles also come with manufacturer warranties and the latest gadgets and features, offering unmatched comfort but, again, at a higher purchase price. Older models typically might lack the newest technology. Plus, the safety features usually don't have the benefit of a warranty, leading to higher maintenance and repair costs over time.

Other factors also include the car’s make and model, plus year of manufacture and mileage.

Financing Options

When considering vehicle financing options, decide which option would suit you, and your budget, best.

Financing options like instalment finance (plus a balloon payment), leasing and Guaranteed buy-backs/Guaranteed Future Value (GFV) have enabled motorists to get behind the wheel of their dream car at a manageable cost.

And for those with deep pockets or who are really good at saving, cash payment is an option, too.

Each of these options has its nuances (interest rates and loan terms), which significantly affect the overall cost. For example,

  • Bank loans offer competitive interest rates but may require a sizeable deposit. 

  • Dealership financing is convenient and sometimes offers promotional rates, but these may only be available for certain models or terms. 5

  • Personal loans provide an alternative but may come with higher interest rates. 

Let’s unpack each financing option; that way, you know what you’re signing up for, pros, cons and all:

  1. Bank finance
  • Competitive interest rates.
  • Flexible loan terms, typically ranging from 12 to 84 months.
  • You own the car once the loan is settled.
  • May require a down payment (deposit).
  • The car is collateral (it can be repossessed if payments are not made).

  1. Finance with a Balloon Payment
  • Lower monthly payments during the term of the loan.
  • Flexible loan terms, typically ranging from 12 to 8472 months.
  • Allows buyers to drive a more expensive car than what might be affordable.
  • Large balloon payment at the end.
  • Higher overall cost due to interest accumulating on the balloon amount.
  • The car might be worth less than the balloon payment when it’s due.

  1. Dealership Financing
  • Convenient (financing, also through banks, is arranged at the point of purchase).
  • Promotional financing rates, particularly for new cars.
  • Offers financing to those with poor credit.
  • Interest rates may be higher.
  • Limited financing options.
  • Complex negotiations, plus the possibility of additional fees.

  1. Guaranteed Buy-Backs/Guaranteed Future Value (GFV)*
  • Provides certainty about the minimum future value of the vehicle.
  • Flexibility at the end of the finance term.
  • Lower monthly payments compared to traditional loans.
  • Mileage and condition restrictions to maintain the guaranteed value.
  • Settlement amount (outstanding balance) can be substantial if choosing to keep the vehicle.
  • Less equity in the car compared to traditional financing options.

*Guaranteed Buy-Backs or GFV is where the financier guarantees the value of the car at the end of the term. At this point, the buyer can return the car, pay the residual and keep it, or trade it in.


There’s no perfect time to buy a car… Or is there? Read News24’s article detailing the 5 most opportune moments to purchase a car.

But keep in mind that none of these mean anything without taking depreciation into account.

In short, depreciation is your vehicle’s value declining over time. This process is inevitable and happens from the moment you purchase the car and drive it from the dealership showroom.

Understanding Depreciation

By the three-year mark, most cars will have lost about 40-60% of their initial value. Several factors, like the brand and model, vehicle condition and market trends, can influence the depreciation rate.

The reason behind this is certain brands and models are known for their durability and reliability, which tends to slow down their rate of depreciation. 

Typically, brands like Volkswagen and Audi retain their value better than brands like Nissan, Alfa Romeo, and Jaguar, which suffer from depreciation. A separate study found the following car brands lost the most value: 1. Fiat, 2. Jaguar, 3. Land Rover, 4. Audi, 5. Mercedes-Benz

A February 2023 article by GreaterGood also found that “the BMW 7 Series is one of the vehicles with the fastest depreciation. Over the course of five years, the average depreciation of this car has been 72.6%, resulting in a nearly $74,000 (R1,397,231.23) reduction in value. This is followed by the BMW 5 Series, which has a five-year depreciation rate of 70.1%, or nearly $47,000 (R887,420.17).”

Additionally, a well-maintained car with lower mileage usually retains more value.

Then, of course, changes in consumer preferences and fuel prices can affect vehicles differently. Lastly, the supply and demand. 

Popular models in high demand often depreciate more slowly than their lesser preferred counterparts.

Resale Value

Did You Know: The following factors influence a car’s resale value

  1. Brand reputation.
  2. Market demand.
  3. Car condition and mileage.
  4. Economic factors (fuel prices, etc.).
  5. Accident and repair history.

Brands known for reliability and quality, cars that are in high demand (due to their utility, fuel efficiency, or style), and those that have been well-maintained and have lower mileage will generally sell for more.

And, of course, fuel prices plus other economic conditions can influence the demand for some vehicle types, affecting their resale value.

Vehicles with high resale value provide a better return on investment when it's time to sell or trade them in. Therefore, considering a car’s resale value is crucial when purchasing a car; it significantly affects the total cost. 

Car ownership should be about the immediate cost, the features of the car and considering how the car will fare financially in the long term. Remember to research and choose vehicles known for their durability and stable market demand to ensure a wise investment.

Insurance Costs

Car cover is essential anywhere in the world, but in South Africa, with our pothole-riddled roads, it may as well be mandatory. 

But it isn’t.

That doesn’t take away from the fact that every motorist stands to benefit from having an active insurance policy. 

Here are the insurance coverage options available for drivers in South Africa:

  1. Third-Party Liability Insurance: This is the most basic form of motor insurance offered in South Africa. It covers you against damages caused to another person or their property. However, it doesn’t cover damages to your car.

  1. Third-Party, Fire, and Theft Insurance: This policy covers your car against loss or damage due to fire and theft. But, it does not cover damages from collision-related accidents.

  1. Comprehensive Insurance: This is the most inclusive type of car insurance, covering damage to your car, third-party liability, theft, fire, and other risks like hail or flood damage. Comprehensive insurance is typically the most expensive but offers the broadest protection.

Drivers with comprehensive coverage can enjoy the comfort of knowing they’re protected against multiple perils. 

Fully comprehensive insurance is particularly beneficial in situations where costs of repair or replacement due to accidents (regardless of who’s at fault), natural disasters, theft or vandalism could be financially debilitating.


If you’re still concerned about those monthly premiums, a car on the simpler side will see you paying less for car insurance. 

What do we mean by this?

Well, a simple Toyota Yaris or Corsa Lite will be easier on your pockets than a sporty number. Click here to read more about saving on your insurance premiums.

Fuel Expenses

Being informed and strategic about fuel-related expenses can greatly influence the overall affordability and sustainability of your vehicle ownership experience. The type of vehicle chosen, its fuel efficiency, and the fluctuating prices of petrol all play critical roles in determining how much you'll spend on fuel over the lifespan of your car.

Fuel Efficiency

Fuel efficiency determines how much fuel a car uses to travel a specific distance kilometres per litre (km/l). The more fuel-efficient a vehicle is, the less it will cost to run over time.

Fuel efficiency is a pivotal factor in the ongoing operational costs of a vehicle. 

Take sedans, for example. They’re known for better fuel efficiency, especially models with smaller engines or those designed for city driving. Sedans are ideal for drivers who prioritise economy oversize or off-road capability.

SUVs (Sports Utility Vehicles) and other off-road motors also tend to have low fuel efficiency due to their larger size and heavier weight. However, advancements in technology have led to more fuel-efficient SUV models, especially in compact or crossover categories.

Read more about which model, sedans or SUVs, win the fuel efficiency debate here.

Hybrid cars are another fuel-efficient option. Hybrid vehicles combine a traditional internal combustion engine with an electric motor. 

They are often the most fuel-efficient, particularly in urban settings where their regenerative braking systems are most effective. Hybrids can significantly reduce fuel costs, especially in stop-start city traffic.

Fuel Prices

The ever-fluctuating nature of fuel prices can make car ownership a little bit tricky. Due to various global and local factors, petrol prices hardly remain the same thus the overall cost is majorly impacted.

What we can say to you is to keep an eye on fuel price trends. This can help in budgeting for fuel costs. The use of apps or websites that track fuel prices in different regions can benefit you greatly.

Here are some more tips for getting the most fuel savviness out of your car:

  1. Regular maintenance. Keep the car well-maintained (ensuring proper tyre pressure and regular oil changes).
  1. Driving habits. Adopting fuel-efficient driving habits (gentle acceleration and maintaining steady speeds).
  1. Reducing load and drag. Minimise excess weight and avoid carrying items on the roof rack when not necessary.
  1. Planning trips. Combine errands into a single trip and avoid peak traffic times (this reduces the amount of time spent idling in traffic, thus saving fuel).

Choosing fuel-efficient vehicles and adopting these practices is your key to optimum fuel usage. car owners can significantly reduce one of the main ongoing costs associated with owning a vehicle.

Maintenance and Repairs

Investing in routine upkeep and conducting regular inspections can save you significant money and hassle in the long run.

Routine Maintenance

Regular maintenance is essential for keeping your car in top condition and ensuring optimal performance. Key maintenance tasks typically include short-term check-ups like oil changes and coolant levels, tyre rotations and tread depth, brake inspections, and replacing air filters. 

Motorists are advised to adhere to the manufacturer's servicing schedule, found in your vehicle's manual. This schedule will outline when specific tasks should be performed based on mileage (distance travelled) or different time intervals.

The costs associated with routine maintenance depend on the car you drive and the service provider. 

Michanic, South Africa’s self-appointed “premier mobile mechanics”, have a list of the average cost of service fees for Volkswagens, Toyota and other car brands, from entry-level to exclusive models.

An entry-level VW Polo Vivo, Toyota Yaris, Honda Brio, or Hyundai i10 will cost an average price of  R 1,010 for minor servicing, while major maintenance will set you back about R 2,200.

The higher your car’s classification, the more you stand to pay for maintenance.

Still, investing in your car’s regular upkeep will save you money in the long run by preventing more significant issues and extending your vehicle's lifespan. Regular maintenance ensures your vehicle runs efficiently while also maintaining its resale value and keeping your warranty valid.

Unexpected Repairs

Whether you realise it or not, you probably love a surprise; we’d go as far as saying most people do. Unless that surprise is an unexpected vehicle repair.

Repairing your car can be expensive on a regular day, but it’s made even more financially devastating when it catches you off guard.

The truth is no matter how well you maintain your car, breakdowns can still happen. From minor issues like oil changes to major problems such as transmission failures. The costs for these repairs vary widely, potentially running into thousands of Rands for significant issues.

To lessen the financial impact of unforeseen repairs, you could consider getting an extended warranty while consistently attending regular vehicle inspections. Extended warranties can cover the cost of many repairs after the manufacturer's warranty expires, providing peace of mind and financial protection. 

Meanwhile, regular inspections (by a qualified mechanic, not your cousin from down the road) can help identify potential issues before they become huge problems. 

Doing the above is sure to save you money and avoid breakdowns.

Licensing and Registration

Part and parcel of owning a car means understanding and preparing for the costs associated with car registration and roadworthy tests. After all, these tests are essential steps in vehicle ownership. 

By choosing to stay informed about the fees and requirements, you can maintain your vehicle's condition. Additionally, doing so ensures a smoother registration process and contributes to safer roads for you and other motorists.

Vehicle Registration Fees

When you register a vehicle, the process involves several fees that differ based on the car's type, size, and the location where it's being registered

These fees typically include the cost of licensing the vehicle, which is an annual expense, and the initial cost of obtaining number plates. For newer vehicles, there may also be a once-off registration fee payable at the time of purchase.

According to The Department of Transport’s January 2022 gazette, service fees for the online application, issuing and delivering a registration certificate for motor vehicles and the online notification of change of ownership were set at R530 each. 

However, the department went on to correct this amount to R330.

To calculate how much you stand to pay, check with your local licencing office or transport department for the exact fees applicable to your situation.

Roadworthy Tests

A roadworthy test determines whether a vehicle is safe to drive or not. If a car passes, it’s certified as roadworthy by the National Traffic Information System (NaTIS). The test covers several critical safety components, including brakes, tyres, lights, and steering mechanisms.

However, the roadworthy test is not a comprehensive technical examination.

The cost of a roadworthy test differs based on location and the type of vehicle being inspected. However, a 2024 article by Autotrader (an online automotive classifieds advertising website) found that South Africans can generally expect to pay between R600 to R750 per vehicle.

To ensure your vehicle passes the roadworthy test, it's advisable to conduct a pre-inspection check. 

Look for common issues that can cause failure, like the car body and chassis having rust or damage, worn tyres, malfunctioning lights, or brake problems. Addressing these issues beforehand can save time and the additional cost of re-testing. 

Regular maintenance and addressing any wear and tear promptly can also help ensure that your vehicle remains roadworthy and safe to drive.


Suffice it to say, the true cost of buying a car in South Africa extends far beyond the initial purchase price. Prospective car buyers must keep in mind the range of additional expenses like insurance premiums, maintenance and repair costs, licensing and registration fees, and the potential costs associated with roadworthy tests. 

Each of these components plays a vital role in the total cost of ownership, influencing both the short-term and long-term financial commitments of owning a car.

That’s why motorists should plan around these costs to make an informed decision that aligns with your financial situation and lifestyle.

Regarding regular maintenance and insurance, you’ve got nothing to lose and everything to gain. These two things protect your investment but also ensure your safety and the car's longevity. 

Licencing, registration, and roadworthy tests are legal requirements that contribute to the overall cost but are vital for compliance and road safety.

All-in-all, a well-informed purchase decision is the key to enjoying the benefits of car ownership without undue financial strain.

Ready to take the next step towards worry-free car ownership?

Pineapple offers comprehensive insurance that covers all the bases, from accident to theft protection and other unexpected perils. With our transparent policies and competitive monthly premiums, you can drive confidently, knowing you're fully protected.

Get a quote and experience the Pineapple difference for yourself today.

Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.

Team Pineapple

Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.

Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.

*We say they’re the finest because we want them to keep writing for us!

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Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

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