How much it costs to finance a R300,000 car in South Africa at current rates

Despite the pause on interest rates by the South African Reserve Bank (SARB) on Thursday (20 July), consumers are still under severe financial pressure, and car buyers can expect to pay 11% more for a vehicle compared to just 19 months ago.

The South African Reserve Bank’s (SARB’s) Monetary Policy Committee (MPC) on Thursday voted to hold rates, keeping the repo rate at 8.25%, with the prime lending rate at 11.75%.

Since the start of the rate hike cycle in November 2021, rates have been hiked by 475bps to the highest levels in 14 years.

“Along with electricity and other hikes, the burden on consumers, homeowners and buyers has been simply too high. Consumers, homeowners and buyers have had to absorb enough rate hikes now,” said the chairman of the Seeff Property Group, Samuel Seeff.

WesBank agreed with Seeff’s sentiment, adding that the effects of interest rate increases over the hike cycle on car, home, credit card, and other debt repayments have weighed heavily on consumers.

The credit provider added that household debt levels in South Africa remain at high levels – with more than 62% of disposable income servicing debt.

“Household budgets remain under tremendous pressure, and those who have had car and home loans since the start of the rate hiking cycle, post-Covid-19, have now really started feeling the effects,” said WesBank.

This pressure on consumers was also noted in the National Association of Automobile Manufacturers (Naamsa)’s New Vehicle sales for June 2023, where the new passenger car and light commercial vehicle market reflected a relatively stagnant year-on-year volume increase of 0.8% or 251 units for new passenger cars, recorded from 29,544 in June 2022 to 29,795 in June 2023.

Naamsa said this reflects local motorists’ financial constraints in South Africa, as interest rates, fuel, and food prices remain elevated.

Additionally, the inflationary environment has pushed the prices of cars up in the country, and according to the TransUnion VPI report, 50% of car buyers are looking for vehicles above the R300,000 price bracket.

According to the report, the percentage of cars – both new and used – being financed below R200,000 declined to 20% in Q1 2023 from 25% in Q1 2022 due to the increased average purchase price of new vehicles, leaving little choice for prospective buyers in this price band.

The data further found that 30% of vehicle financing deals were for cars between R200,000 and R300,000.

These compounding effects have meant that South Africans are paying a lot more for cars today than they did 19 months ago.

At the start of the rate cycle, those who purchased a R300,000 vehicle at 7% would be due to pay a total interest amount of R68,259. However, financing the same vehicle today at 11.75% would amount to a total interest of R119.481 – a 75% increase.

The additional monthly expense South Africans are paying for a vehicle, depending on the value of the car, is given in the table below.

Value of the vehicle	September 2021 (7%)	May 2023 (11.75%)	Change
R175 000	R3 558	R3 966	+R408
R200 000	R4 053	R4 519	+R466
R225 000	R4 548	R5 072	+R524
R250 000	R5 043	R5 625	+R408
R275 000	R5 538	R6 178	+R640
R300 000	R6 033	R6 731	+R698
R325 000	R6 528	R7 284	+R756
R350 000	R7 023	R7 837	+R814
R375 000	R7 518	R8 390	+R872
R400 000	R8 013	R8 943	+R930
R450 000	R9 003	R10 049	+R1 046
R500 000	R9 994	R11 155	+R1 161
R550 000	R10 984	R12 261	+R1 277
R600 000	R11 974	R13 367	+R1 393
R650 000	R12 964	R14 473	+R1 509
R700 000	R13 954	R15 579	+R1 625
R750 000	R14 944	R16 684	+R1 740
R800 000	R15 934	R17 790	+R1 856
R850 000	R16 924	R18 896	+R1 972
R900 000	R17 914	R20 002	+R2 088
R950 000	R18 904	R21 108	+R2 204
R1 000 000	R19 894	R22 214	+R2 320

How much more you’re paying for the top 10 best-selling cars

To give you real-world examples of the changes in monthly payments since the rate hike cycle, BusinessTech looked at Naamsa’s top 10 best-selling cars in the first six months of 2023 and calculated how much it would cost to finance before and after the hike cycle.

These cars, including how many units they sold and how much it costs to finance, are listed below.

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