The Trick to Reducing Your Car and Home Expenses

If you’re like many South Africans, between your car and your bond, you probably spend a large portion of your salary on what you drive and where you live. Unless you keep a close eye on your budget, you may not realise just how much that portion is.

This is a breakdown of some of the main vehicle and home expenses that can come out a salary according to George Smitopoulos, CEO of carfin.co.za:

• Car repayments: Up to 15%
  
• Car insurance: Up to 10%
  
• Fuel: Up to 3.73%
  
• Home loan repayments/rent: Up to 30%

That’s nearly 60% of your income but doesn’t even take into account vehicle warranties, servicing, and household and buildings insurance!

Expenses You Should Reconsider Before Reducing

There’s quite little you can do about reducing these expenses. You could ask the bank to restructure your home loan or car financing so you extend the payment terms, but that will cost you more interest in the long term. Rental inflation is a reality and can be anything from 4 – 10% per year depending on location and various other factors, and if you find a cheaper place to stay, you still have to cover the costs of moving your furniture and belongings, albeit short term expenses. Likewise, fuel, vehicle warranties, and servicing costs are often not negotiable expenses.

Expenses You Shouldn’t Eliminate

The only variable cost is insurance. Don’t start thinking you can cancel it though – you could end up with much bigger bills. If, for example, you are in a car accident, there is a two-thirds chance you’ll collide with someone who isn’t covered. Between 65% and 70% of South African drivers do not have car insurance. Because many people feel they can’t afford it, according to the Automobile Association, it’s unlikely your insurer will recoup expenses from the other driver, making you liable for the full excess to repair your car.

Expenses You Can Reduce

Before you start feeling overwhelmed, there is something you can do to reduce your home, buildings, and car insurance – in less than two minutes.  Simply shop around for a better deal.

You can switch insurers at any time. In fact, at hippo.co.za, we encourage you to compare insurance quotes regularly to make sure you’ve always got the best deal for you.

To save money regularly, we recommend comparing quotes at the following times:

• at least once a year
  
• when your current insurance premium goes up
  
• the regular drivers on your policy have changed (such as when your child obtains his/her driver’s licence)
  
• you’ve moved house or offices
  
• you’ve recently installed a vehicle tracking device or upgraded your home security 
• you go on an advanced driving course, which may reduce your premium depending on the insurer

The good thing about shopping around for insurance online is that you are not obligated to take up cover with anyone if you choose not to. Comparing insurance quotes is free, so before you commit, hippo it and get a quote today.

Sources: Fin24; Fin24; Bloomberg; Wheels24

Prices quoted are correct at the time of publishing this article. The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.