High-value cars you can afford on a middle-income salary
Shopping for a new or pre-loved car is great fun but before rushing out to view an array of gleaming chariots on the showroom floor it’s important to be realistic about what you can afford on your salary.
If you are an average middle-class South African your salary is likely at least R24,813 a month according to Statistics South Africa’s quarterly employment survey in September 2022. Data released by FNB also shows that most people earning between R15,000 and R40,000 a month take just five days to blow 80% of their salary, and are broke by the 6th of the month.
This makes it important to stop and think carefully about how you intend to add a car repayment to your monthly budget and to consider cutting back on frivolous spending so you can treat yourself and shop for that new ride you really need but keep putting on the back burner.
To get you started – here are a few potential vehicle options that are affordable, depending on how you structure your budget, that you potentially could get pre-approved finance for from Group1 Cars, if you are earning between R24,800 and R40,000 a month. There are additional monthly and annual costs associated with financing and owning a vehicle that you will need to consider upfront, such as licensing fees, credit initiation and transaction fees, insurance, maintenance and fuel costs.
Entry-Level Cars For Middle-Income Salary Earners
Based on a monthly income of R24,800 to R30,000 and assuming a 12% interest rate for a car loan over 60 months (five years), the maximum monthly affordable car payment is around R4,960. However, this will depend on your credit score, and the other monthly expenses that you must honestly declare in your credit application in terms of the National Credit Act, whether you pay a deposit or opt for a balloon payment. A balloon payment will reduce the monthly instalments on your loan but this sum will need to be paid up or refinanced after 60 months.
A few options of new vehicles that you could probably consider affordable with instalments around this sum at an interest rate of 12% over 60 months include:
| Model | Retail price | Term (months) |
Interest rate | Monthly repayment |
|---|---|---|---|---|
| Volkswagen Polo Vivo | R235,000 | 60 | 12% | R4,598 |
| Renault Kwid | R162,900 | 60 | 12% | R3,175 |
| Ford Figo | R193,600 | 60 | 12% | R3,775 |
| Hyundai i20 | R270,900 | 60 | 12% | R5,278 |
| Renault Duster | R285,900 | 60 | 12% | R5,572 |
| Nissan Almera | R299,900 | 60 | 12% | R5,859 |
| Nissan Micra | R305,200 | 60 | 12% | R5,948 |
| Toyota Corolla Quest | R293,400 | 60 | 12% | R5,716 |
Affordable Vehicles For Middle-Income Earners
If your salary is around R40,000 a month you may qualify for a higher loan amount as you will be able to afford a higher monthly instalment, depending on your credit record and other financial commitments such as any bond, store accounts or personal loans that you may have. Here are a handful of cars that you could consider browsing in your affordable price range of around R8,000 a month at an interest rate of 12% for 60 months:
| Model | Retail price | Term (months) |
Interest rate | Monthly repayment |
|---|---|---|---|---|
| Nissan Qashqai | R465,900 | 60 | 12% | R9,080 |
| Nissan X-Trail | R478,400 | 60 | 12% | R9,326 |
| Hyundai Tucson | R482,900 | 60 | 12% | R9,413 |
| Toyota Corolla | R367,400 | 60 | 12% | R7,176 |
| Volkswagen Tiguan | R499,500 | 60 | 12% | R9,748 |
| BMW 1 Series | R541,842 | 60 | 12% | R10,578 |
Deposit And Interest Rate Negotiations
The above prices and instalments are simply starting prices and guidelines to give you an idea of where to start your search for your new, high-value affordable vehicle. You must bear in mind that you can shave hundreds, even thousands of rands off your monthly payments if you opt for a slightly cheaper second-hand model. If you trade in your old vehicle and use the proceeds as a deposit for your new vehicle purchase this will also save you thousands of rands in interest costs over the loan term.
Remember, vehicle prices and interest rates are typically negotiable so be sure to choose the best value for money option and the cheapest finance plan. You will also need to budget for costs such as credit initiation and credit insurance fees – again be sure to shop around for credit life insurance as according to the NCA you have the right to choose this cover – as well as the dealership or service delivery fee that is added for extras like pre-delivery checks of the vehicle, valets and administration charges.
Vehicle Insurance And Licensing Fees
Most dealerships and financial institutions will require that you take out insurance on the vehicle (particularly new cars), which can cost anything from around R500 a month to R2,000 a month or more depending on several factors. These include your age, vehicle accident and previous insurance history, the value of the vehicle and your personal consumer information such as your age, believe it or not, your marital status, physical address and security where the vehicle will be parked during the day and overnight.
Get Pre-Approved Vehicle Finance
Before heading out to buy your new ride, be sure to consider these costs and get pre-approved finance from Group1 Cars, so you can avoid the disappointment of falling in love with a car you simply cannot afford. Once approved for finance, Group1 will also help you find a car that is affordable and approved in terms of the loan conditions, or you can shop online and browse your pre-approved price range of affordable cars using the convenient find a car tool on the Group1 Cars website.
