Vehicle Finance Interest Rates in South Africa


Buying an automobile is something you’ve decided to do. With that in mind, here are some considerations to keep in mind when you buy a new or used vehicle.

Your lifestyle and your money will be better served if you have a clear picture of what you need in a vehicle. Are you going to be taking the kids out? For the most part, you’ll be driving within the city limits. 

Vehicle Finance in South Africa

The primary REPO rate was 6.25 percent in January 2020, the lowest level in over two decades. A bank may not tell you a specific interest rate for a loan, but your loan’s interest rate will almost certainly be tied to the REPO rate. This means that if the REPO rate decreases, your interest rate will decrease by the same percentage as well.

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REPO rates have been reduced by a total of 2.5 percent during lockdown, to 3.75 percent. This was done to stimulate the economy. There has been a significant decline in the Prime lending rate, which is the rate banks use as a benchmark for their lending.

Depending on your unique credit risk, the interest rate you pay on a loan will either be fixed at Prime + x percent or fixed at the lower end of the Prime rate. Your interest rate might be as low as prime minus 2% if the banks see you as a low-risk borrower.

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Prime minus 2% at the start of the year would have been 9.25 percent. A 6.75 percent increase would be the result!

Do you know how much it’s worth in terms of money? As an example, have a look at this:

In January 2020, you paid R199 000 for a 2019 Toyota Etios 1.5 XS and an R19 900 deposit (10 percent ). Using the prime interest rate, you agreed to pay off the Etios over a period of six years (72 months).

Your payment would have looked like this in January 2020:

At prime, the interest rate will be 11.25 percent on January 1, 2020.

Repayments are R3449 per month.

Amount Paid: R248 344.00

R68 344 in total interest

Your bill would have looked like this in June 2020:

On June 6, 2020, the prime interest rate will be 8.75 percent.

a payment of R3222 each month

R232 006 was the total amount paid.

R52 006 in total interest

Over the course of six years, you would have saved R16 338 by reducing your monthly expenses by R227. Investing just R227 a month at a rate of interest of 3.5 percent over the course of six years could net you over R19 000. Be responsible. Instead of paying R3449 every month, you can pay off your automobile in six months by making the same monthly payment.


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