How much your monthly car repayments have increased since 2021
Consumers are paying 11% more for their monthly car repayments. But the total interest cost is significantly higher than that. In a little more than 18 months, the South African Reserve Bank (SARB) has hiked interest rates by 475 basis points. Since November 2021, 10 increases have pushed the prime lending rate from 7% to it’s current 11.75%. […]
Consumers are paying 11% more for their monthly car repayments. But the total interest cost is significantly higher than that.
In a little more than 18 months, the South African Reserve Bank (SARB) has hiked interest rates by 475 basis points.
Since November 2021, 10 increases have pushed the prime lending rate from 7% to it’s current 11.75%.
MONTHLY CAR REPAYMENTS
BusinessTech has done a useful comparison of what your monthly car repayments today versus 2021.
As these increases are more likely to impact lower-income households, let’s look at an entry-level car of R250 000 financed over five years (60 months).
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At the interest rate of 7% back in 2021, the monthly car repayments would have cost you R5 043.
That same purchase at today’s increased interest rate of 11.75% will see a monthly repayment of R5 625.
The difference is R582, or 11%.
This may not sound like much, but if you extrapolate that over the lifecycle of the car, the compounding effects quickly add up.
The total interest amount in 2019 would be R47 245 versus R82 170 today.
That represents a 73.9% increase.
Below is a list of the interest change cost up to cars valued at R500 000.
MONTHLY CAR REPAYMENTS TO R500 000
| Value | 2021 (7%) | 2023 (11.75%) | Change |
| R175 000 | R3 558 | R3 966 | +R408 |
| R200 000 | R4 053 | R4 519 | +R466 |
| R250 000 | R5 043 | R5 625 | +R582 |
| R300 000 | R6 033 | R6 731 | +R698 |
| R350 000 | R7 023 | R7 837 | +R814 |
| R400 000 | R8 013 | R8 943 | +R930 |
| R450 000 | R9 003 | R10 049 | +R1 046 |
| R500 000 | R9 994 | R11 155 | +R1 161 |
The solution for cash-strapped motorists is to opt for a more affordable car and pay cash up front or a larger deposit to avoid financing a large portion of the vehicle.
Then, aim to pay the vehicle off as quickly as possible to reduce the total interest amount.
It will save you thousands in the long run.