Car finance calculator (South Africa)
Work out your monthly vehicle instalment, including a balloon payment, and see the real total cost before you sign.
What is a balloon payment?
A balloon (or residual) is a lump sum, usually 10–40% of the car's price, that you owe at the end of the finance term. It lowers your monthly instalment, but you pay interest on that amount for the whole term, and you need to settle or refinance it at the end. Many South Africans end up refinancing the balloon and paying interest twice.
Try setting the balloon above to 0% and then 30% to see the difference in total interest.
How car finance repayments are calculated
The amount financed is the vehicle price, minus your deposit or trade-in, plus the initiation fee. The bank charges interest monthly (annual rate ÷ 12). With a balloon, the instalment is worked out so that the balloon amount is still owed after the last instalment. The monthly service fee is added to each instalment.
Worked example: a R350 000 car
- Price R350 000, deposit R35 000, initiation fee R1 207.50: amount financed is R316 207.50.
- At 13.25% over 72 months with no balloon, the instalment is R6 389.38 + R69 service fee = R6 458.38 a month.
- Total interest is about R143 828, so the car costs about R500 003 in total.
- With a 30% balloon (R105 000), the instalment drops to R5 496.10, but interest rises to about R179 543 and the total cost to about R535 719.
Tips before you finance a car
Stick to 60 months or less if you can. Longer terms mean far more interest, and you may owe more than the car is worth. Budget for comprehensive insurance, which banks require on financed cars, plus fuel and services. A common rule is to keep total car costs under about 20% of take-home pay.
Frequently asked questions
What interest rate will I get on car finance?
It depends on your credit profile. Rates are usually quoted relative to prime, typically from prime to prime + 5%. A bigger deposit and good credit history get you better rates.
Is a balloon payment a good idea?
Only if you have a clear plan to pay it off, for example by saving monthly or by selling the car when the balloon is due. Otherwise it usually makes the car more expensive overall.
How much car can I afford?
A common guideline is to keep all car costs, including the instalment, insurance and fuel, under about 20% of your take-home pay. Check your net salary with the take-home pay calculator and estimate running costs with the fuel cost calculator.
Does a longer term lower my instalment?
Yes, but you pay interest for longer, so the total cost goes up. In the example above, a shorter term would mean a higher instalment but less total interest.