While the decrease in fuel prices will bring some welcome relief for motorists, cash strapped South Africans should budget carefully to cover the costs of owning a vehicle.
Debt Rescue’s chief executive Neil Roets said after a bond or rent, a car is likely to be a consumer’s biggest cost.
Roets was commenting after an announcement by the Department of Energy that the price of fuel is set to decrease by nine cents per litre and diesel by 31 cents a litre on Wednesday, May 5.
The department said the price of illuminating paraffin (SMNRP) would also decrease by 30 cents.
Roets said besides paying back the monthly fees to the credit provider, there are plenty of extras to bear in mind when it came to maintaining a vehicle.
“Maintenance costs, in particular, can be higher than expected, especially if new parts are needed; even simple things like replacing window screen wipers can be costly depending on your brand of car, not the mention wear-and-tear items, like brakes,” said Roets.
Senior finance and economics lecturer at Mancosa, Meshel Muzuva, said while the fuel price decrease this month will bring some relief to consumers, ongoing instability in local and global economies is worrying.
Muzuva said the stronger rand has caused the fuel prices to decrease and as a result rescued cash strapped consumers.
He said consumers must remember that there will always be instability of local and global economies and this can affect fuel prices.
“International petroleum prices have been stable, and this has allowed the rand to leverage its recent strength. This has led to a lower contribution to the basic fuel prices on petrol, diesel and illuminating paraffin.”
Muzuva said the fuel price decrease would bring some relief to cash-strapped South Africans.
“Financially-burdened South African consumers can thus expect a breather in May from the series of fuel price increases earlier in the year and users of paraffin will be delighted with the news as we are approaching cold winter months.”
However, he said consumers should continue to watch their finances closely as the ongoing instability in both local and global economies may point to future uncertainty around petrol prices in the coming months.
“Global financial markets do impact the rand, so the weakening of the rand in future could push the fuel price further to unsustainable levels and bite the little income at the disposal of households,” said Muzuva.
Roets said based on a recent Debt Rescue survey which revealed that 34% of respondents had lost their jobs, and 22% had been retrenched in the past 12 months, covering a vehicle’s costs could become financially difficult.
“There is a risk of having a vehicle repossessed if payments are defaulted on. Unsurprisingly, given how lockdown has affected many consumers and businesses, repossession rates are on the rise,” he said.
He advised consumers to create a budget that included all costs associated with owning a vehicle.
“If the total cost is beyond your financial means, it’s time to reassess your financial position urgently – before you miss your monthly payments as this could affect your credit score or even worse, you could end up with legal action and have your vehicle repossessed,” said Roets.