Could spending R500 000 less on a car put a South African family closer to owning a home? A cheaper vehicle could free up about R13 750 a month – enough, on paper, to match the repayment on a R1.42m home loan.

According to Regard Budler, CEO of BetterSure Financial Consultants, the arrival of more affordable Chinese electric vehicles (EVs) in South Africa offers an opportunity to examine how transport costs could affect a household’s ability to buy a home.

Consider a choice between a R1m petrol vehicle and a R500 000 EV. The R500 000 difference in purchase price is significant, but the potential savings don’t stop there. A less expensive car could mean lower monthly finance repayments, while charging an EV at home could cost considerably less than filling up with petrol.

For households with sufficient surplus solar power, charging costs could be close to zero, although you still need to consider the upfront cost of installing and maintaining the solar system. Insurance costs also vary, with EVs potentially attracting higher premiums because specialised parts and repairs can be expensive.

When you consider vehicle finance, energy, and insurance together, illustrative calculations suggest monthly savings of about R13 750. For a household with sufficient surplus solar power, this could rise to nearly R14 900.

What could those savings mean for a dream home?

At an illustrative home-loan interest rate of 10% over 20 years, saving R13 750 a month is roughly equivalent to the monthly repayment on a home loan of R1.42m. Saving R14 900 a month could equate to a loan of about R1.54m.

The money spent on a more expensive car could potentially have gone towards a home instead. For someone hoping to buy their first property, these figures offer an interesting perspective on how everyday financial decisions can influence longer-term goals.

However, these calculations are illustrative rather than a guarantee that a buyer would qualify for a bond of that amount. Banks consider income, existing debt and overall affordability when assessing home-loan applications. Buyers must also budget for deposits, transfer and bond registration costs, rates, levies, insurance and ongoing maintenance.

Your vehicle finance may run over five years, while a home loan may run for 20 years. The comparison highlights the potential value of freeing up money each month, rather than suggesting the savings automatically translate into a home loan.

Making room for a long-term investment

A car provides essential transport, but it generally loses value over time. A home, on the other hand, can offer a family greater stability and the opportunity to build wealth over the long term, although property ownership also comes with costs and risks.

This does not mean an EV is the right choice for every household. Buyers should consider their driving needs, access to charging facilities, electricity costs, insurance, and the availability of suitable repair services before deciding.

However, for some South Africans, choosing a more affordable vehicle could free up money for a deposit, bond repayments, or other homeownership expenses.

As Budler’s comparison highlights, a car’s cost is more than its showroom price or monthly instalment. It also affects other financial goals those expenses may put out of reach.

For aspiring homeowners, the next vehicle purchase could be a chance to ask a different question: Not just what I can afford to drive, but what I could afford to own if I spent less getting there.

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