After months of steep fuel price increases, consumers can finally let out a small sigh of relief: the cost of petrol, diesel and paraffin has decreased at the pumps. As of Wednesday 5th May, motorists will pay 9 cents less for a litre of 95 and 93; 31 cents less for diesel 0.05% and 30 cents for 0.005%. Illuminating paraffin will cost 23 cents less than in April. When considered against the monthly fees associated with owning and running a vehicle, this is a welcome adjustment, says Neil Roets, Debt Rescue CEO.
“While Covid-19 has seen many employees and business people work from home – saving them a pretty penny on commuting costs – there are a number of other fees consumers need to budget for when owning a car, and which have not been affected because of the pandemic,” he cautions.
Firstly there is the monthly finance instalment, which is affected by the interest rate, as well as short term insurance, which is a requirement by the creditor. Then add the vehicle service and maintenance costs, which is at least once per annum, but often more, as well as car licence fees which cost in the region of R400 per vehicle, or even higher, depending on the vehicle size.
Day-to-day costs of parking and toll fees, not to mention traffic fines, also need to be taken into consideration, as does roadside assistance. When all is added up, along with the fluctuating price of fuel, the total is often more than expected, if it is even fully known to the vehicle owner at all.
“After a bond or rent, a car is likely to be a consumer’s biggest cost. Besides paying back the monthly fees to the credit provider, there are plenty of extras to bear in mind. 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” says Roets.
Covering costs could be challenging
He goes on to say that given so many consumers have experienced a change in their employment status – as per a recent Debt Rescue survey which revealed that 34% of respondents had lost their job, 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.
The best advice is to work out a budget that includes 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,” advises Roets.
Debt counselling may be required
Should you find yourself in a tricky position, it may be time to turn to debt counselling. Here, professionals will assess your financial position, and work with your creditors to renegotiate repayment terms. You’ll also be protected from any legal action.
“With less money in their pockets thanks to the financial ravages of the pandemic, consumers have had to fight tooth and nail to get through the month. Even small decreases such as this month’s fuel price, matter, as it all adds up. Of course, the fuel price is subject to fluctuations based on the exchange rate and the price of oil, but fortunately we can expect to enjoy this relief for the next month at least, while these two factors work in our favour,” concludes Roets.