Latest stats from the National Association of Automobile Manufacturers of South Africa (Naamsa) show that the domestic new-car market experienced its best February in over a decade, with nearly 53 500 vehicles sold in February 2026.
Buoyed by lower inflation and better local economic conditions, many South Africans are entering the market – whether buying a new vehicle or trading in their current one. But as Marius Kemp, Head of Personal Lines Underwriting at Santam, warns, this is not a decision to take lightly.
“Buying or selling a vehicle is a significant financial decision,” he says. “Understanding the full picture – from running costs to insurance considerations – all form part of making a smart, informed decision.”
The real cost of car ownership
It’s easy to forget that your monthly car instalment is only around 50% of the cost of owning a car. As such, Kemp urges motorists to factor in all additional fees and ongoing expenses to avoid unexpected surprises.
“First off there are on-the-road fees to consider,” he says. “These are the expenses the dealership will add to your invoice to cover licensing, number plates, delivery and servicing.”
With fuel making up one of the biggest line items in any car owners’ budget, Kemp adds that external factors can have a significant impact on monthly running costs. “Recently, fuel prices have been on a downward trend, but this has seemingly come to an end. Geopolitical uncertainty, supply chain disruptions, and fluctuations in the rand mean this needs to be budgeted into monthly costs when considering a new car.”
Negotiate wisely when selling or trading in
For those selling or trading in a vehicle, Kemp emphasises the importance of doing thorough research. “Most people accept the first offer they get rather than shopping around,” he says. “Know the market value of your vehicle and don’t approach negotiations desperate for a conclusion. Walk away if you must, until you are happy with the offer.”
When trading in a vehicle, Kemp recommends settling on the price of the old car first, before negotiating the new car’s price. “This process is often referred to as ‘banking’ because the trade-in value is effectively ‘banked’ or applied to the loan balance, making it easier to finance your next vehicle.
Balloon payments: Debt trap or useful tool?
Essentially a bulk payment that is made at the end of a car loan, balloon payments have become more common as consumers look for ways to make car purchases more affordable.
While it keeps monthly repayment costs more affordable and attractive, Kemp warns that a balloon payment commitment can become a challenge in the event of an accident or if your car’s trade-in value is less than the amount of the balloon payment. “If your car has been written off, stolen or hijacked, and it is insured only for market value, you will end up owing the bank a lot of money. This means you’ll be paying for a car that you’re not driving.”
Choosing the right car insurance
Whether buying or selling, insurance remains a critical consideration. Motorists can choose between third-party-only cover, limited fire and theft, or comprehensive insurance. “The value of your car – and therefore the cost to repair or replace it – should guide your insurance choice,” Kemp notes. “Comprehensive cover provides protection against accidental damage, theft and third-party liability, giving motorists peace of mind that their investment is protected.” Banks also require the vehicle to be insured on comprehensive cover whilst under the finance period.
On the topic of balloon payments, he mentions shortfall cover. “Not only can it cover the risk of balloon payment obligations in the event of theft or an accident, but you can also get top-up credit or credit shortfall cover for when you’re in a financial crisis.”
Insurance premiums are determined by several factors, including the make and model of the vehicle, its usage, where it is parked, and the chosen excess. It is also important to understand the difference between retail value and reasonable market value when selecting cover, as this affects how a claim will be settled if a vehicle is stolen or written off.
While it may be tempting to opt for the lowest premium, Kemp cautions that affordability should not come at the expense of adequate cover. “Sometimes ‘cheap’ insurance ends up being expensive in the long run if you’re not properly covered,” he says. “The goal is to find a solution that balances your budget with the level of protection you genuinely need.”
Written by Marius Kemp, Head of Personal Lines Underwriting at Santam, shares practical considerations for South Africans navigating the car market
ALSO READ – Santam Bets on Future Underwriters