Transport · car finance
Cash, finance, a balloon or a lease — which costs least?
A balloon makes the instalment smaller, not the car cheaper. Pick the year you would sell, and see what the same car really costs you four ways — the value it loses, interest and fees, lease payments and the interest your cash could have earned.
How we calculate it
- Everything is worked out to the year you sell — the headline, the charts and the table all stop there.
- Cost to Own = everything paid, less what selling leaves you, plus lost interest. What selling leaves you is the car’s value less any loan still owing.
- On day 0 cash pays the full price; bank finance and a balloon deal pay the deposit and the R1 207.50 initiation fee, then the instalment and R69 a month service fee.
- A balloon is debt, not a cost. Sell before the end and it is settled from the sale like the rest of the loan; keep the car to the end and you pay it in one lump.
- A lease has no equity — you never own the car, so its cost is simply its payments, plus the interest that money could have earned.
- Every rand you pay out could have earned interest instead (on by default, at 7%; switch it off with the tick box) — cash gives up the most, so leaving it out flatters cash.
- Rand as spent; fuel is the same whichever way you pay, and tax on interest earned is left out.
We calculate; we never name a bank, a dealer or a lease company. A balloon lowers the instalment, but you pay interest on the balloon for the whole term and still owe it at the end.
Where the typical figures come from
- Interest rate — Low 10.75%, Moderate 12.75%, High 15.25%: prime is 10.75% since the Reserve Bank raised the repo rate to 7.25% in September 2026; Low is prime (a good-credit deal), Moderate is prime + 2 (ClearScore’s typical vehicle-finance rate), High is about what TopAuto reports for average credit. Briefly, SARB repo 7.25%; ClearScore; TopAuto.
- Balloon — Low 20%, Moderate 30%, High 35% (the slider runs 0–35%): most banks cap a balloon at 35–40% of the price; cars.co.za’s worked example uses 35%; WesBank reported an average balloon of 37% on the 35% of new deals that had one (August 2025). cars.co.za, June 2026; FAnews / Standard Bank.
- Term — 72 months: WesBank’s average new-car contract runs past 73 months; 84 months is offered. NADA.
- Interest your cash could earn — Low 7%, Moderate 8.75%, High 9.75%: GoTyme Bank’s 12-month (8.75%) and 36-month (9.75%) fixed deposits, July 2026; Low is our estimate for a money-market fund. GoTyme Bank.
- Fees: the National Credit Act caps the initiation fee on a vehicle loan at R1 207.50 and the service fee at R69 a month (VAT included) — check your quote. TimesLIVE.
- Car prices: VW Polo Vivo 1.4 Life R271 900, Toyota Corolla Cross 1.8 XS R458 400, Toyota Hilux 2.8 GD-6 SRX double cab auto R658 500 (cars.co.za / TopAuto, 2026); BMW X3 20 R1 047 760. cars.co.za, BMW X3.
- Resale value: a new car typically loses 15–20% in its first year; Toyotas and bakkies hold value better. TimesLIVE / getWorth, 2024.
- Our estimates, not sourced: each preset’s lease payment (about 1.8% of the price a month, scaled from Toyota Kinto’s Corolla Cross subscription), each car’s yearly loss in value, and the Low savings rate. Get a real lease quote — some include insurance and maintenance, some do not.
Services, maintenance, insurance and tyres are excluded because they apply to every option. Bank leases usually exclude insurance; if your lease or subscription bundles maintenance or insurance, it is better than shown by roughly what those would cost you.