Hidden costs when buying a car
A car can be a necessary investment, but extra and hidden costs can add up to thousands more than you expected.
This is according to Naked Insurance, which calculated all the monthly expenses that are often overlooked when consumers consider buying a car.
As a starting point, the insurer emphasised the importance of opportunity cost, which is the concept of “what you’re missing out on when you choose one option over another”.
“For example, when you buy a car for R300,000, the opportunity cost isn’t just the money spent, but also what you could’ve done with it instead, like investing, saving, or buying property,” it explained.
“Essentially, by picking the car, you’re forgoing the potential benefits those other choices might have offered. It’s a reminder to weigh what you gain against what you lose, helping you make informed decisions that align with your priorities.”
To determine whether buying a car makes financial sense, you will need to do some research and calculate how much it will cost you every month.
Firstly, the company explained that you should buy a car that makes sense for your lifestyle and needs.
“Consider what you need from a car. Is it for the daily commute, weekend adventures, or something else? This model should be the perfect fit for your lifestyle and needs,” it explained.
Secondly, you will need to look at how much the loan repayments will be. “Unless you’re paying cash, you’ll likely need a loan.”
The insurer used the Polo 1.0 TSI 70 kW 5-speed 2024 model as an example to calculate the total car payments you would have to make.
“A basic 2024 Polo 1.0 TSI costs around R350,000. Assuming you finance the R350,000 price over 60 months, your monthly repayment could vary based on interest rates and loan terms.”
It also warned against extra costs, such as dealer fees and licensing, that can increase the loan amount.
Assuming a 13.5% interest rate and a zero deposit over 60 months, the monthly repayment for the Polo 1.0 TSI 70 kW 5-speed 2024 model would be approximately R8,053.
Therefore, a 60-month loan of R350,000 at 13.5% will result in you paying roughly R490,000. That’s around R134,000 you’ll pay just in interest.
“If you take out a loan, it’s important to not ignore how much you will end up paying in total at the end of the loan term,” the insurer warned.
Third, you should look at how much you will spend on fuel every month. The company used R22.92 per litre as the petrol price.
Together with the Polo’s fuel consumption of 5.3ℓ/100km, this brings your monthly petrol cost for driving 1,000 km to around R1,134.
However, the actual amount spent on fuel will naturally depend on the customer’s driving habits and traffic conditions.
As a fourth step, you will have to determine the cost of insuring your car, which will vary from person to person.
“Insurance is a must, especially with a new car and a non-negotiable if you are financing it,” it said.
“For the Polo, you’re looking at roughly R1,100 per month with a R5,000 excess. It’s wise to shop around for the best quote and consider how changing your excess can affect your premium.”
For step five, Naked Insurance said to look at unexpected costs. “Even new cars need upkeep. Budgeting around 2% of the car’s value for annual maintenance (about R7,000 or roughly R583 per month) is smart.”
“Plus, set aside around 5% for unexpected repairs. For the Polo, that means planning for potential surprises of R17,500 each year.”
All of these expenses work out to R12,328 per month or R147,936 yearly.
“All in, you’re looking at a significant monthly outlay to own the 2024 Polo. It’s not just about the repayment; it’s the fuel, insurance, maintenance, and those just-in-case costs that add up,” it said.

Apart from the car’s costs, you should also consider how much it will depreciate year-on-year.
“Cars lose value, and the Polo is no exception. Expect it to depreciate by 15% to 30% annually, hitting hardest in the first year. By the end of five years, your R350,000 Polo could be worth a fraction of its original price.”
“When you add up all the expenses, owning a Polo could cost you dearly over five years, far beyond its purchase price.”
“But remember, at the end of that period, you still have a valuable asset despite its reduced value, and it took you where you needed to go over that time.”
The insurer said comparing the daily costs of owning a car to alternatives like Uber or renting can be eye-opening.
“Consider your typical travel needs to determine the most cost-effective option. Remember, owning a car offers convenience and freedom that’s hard to quantify,” it said.
“Beyond the numbers, consider the intangible benefits and how they weigh against the costs. It’s about finding the right balance for your lifestyle and budget.”
“So, take your time, do your research, and choose the path that’s right for you.”
Costs | Monthly | Yearly |
Repayments | R8,053 | R96,636 |
Fuel | R1,134 | R13,608 |
Insurance | R1,100 | R13,200 |
Expected maintenance | R583 | R6,996 |
Unexpected maintenance | R1,458 | R17,496 |
Total | R12,328 | R147,936 |
Comments