Make the right decision for your future

2012-02-11 10:32

It is important to understand the real cost of buying a car and what those monthly repayments mean in terms of giving up other further goals like owning a home.

The banks will tell you that the biggest factor when coming to affordability on buying a home is the existing car debt.
Many customers are turned down for a home loan as their existing car repayments make home ownership unaffordable.

They need to be sensible about the car they buy and find a balance between having wheels to drive them to work and the hot wheels that will destroy them financially.

Makgaba has recently graduated and is one of the lucky few to have landed a really great job.
She wants to buy a new car and according to the bank she can afford a car for R200 000. “Should I buy the car I really like or a cheaper one for R120 000?”

Makgaba can only really afford the car if she can pay it off over 60 months (five years) with no balloon payment.
In that case, she could expect to pay R4 250 per month for the R200 000 car or R2 550 per month for the R120 000 car.

If she opted for the less expensive car and invested therepayment difference of R1 700 per month into a unit trust growing at 10% a year, at the end of five years she would have saved R131 000. That is a deposit on a R1.3 million home.

By making the right decision today, in five years’ time Makgaba will own her car and be moving into her own home.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.