A recent News24 article highlights a concerning trend: many consumers are being urged to buy smaller, cheaper cars as debt levels hit new highs and owning expensive vehicles becomes increasingly risky. The piece emphasizes several troubling data points showing how households are being squeezed financially.

Problems with buying cars that are too expensive:

Higher monthly loan payments and interest costs that strain budgets and reduce money available for emergencies.

Greater depreciation on premium models, meaning buyers lose more when it’s time to sell or trade in.

Higher insurance premiums and steeper maintenance bills for expensive cars, pushing total ownership costs upward.

Increased exposure to economic shocks. When interest rates rise or incomes wobble, large monthly commitments become harder to sustain.

Risk of over-leveraging, where debt grows faster than income, leaving less financial cushion for other needs.

Advantages of buying within a reasonable budget:

Lower monthly payments and easier loan approval, providing greater budget stability.

Reduced insurance and maintenance expenses, contributing to a lower total cost of ownership.

Slower depreciation on dependable, smaller cars, helping preserve resale value.

Greater financial flexibility to save, invest, or handle unexpected costs without compromising essentials.

Improved long-term financial resilience, especially during rate hikes or economic downturns.

Practical guidance and takeaway:

Focus on total cost of ownership, not just sticker price.

Prioritize reliability and financing a car you can comfortably afford.

Build a realistic budget that covers loan payments, fuel, insurance, and maintenance while safeguarding other financial goals.