How much more you’re paying for your car every month in South Africa: 2021 vs 2023

 ·6 Jun 2023

Within a period of just over 18 months, South Africans are paying considerably more to finance their vehicles, resulting in much higher interest amounts having to be paid.

The South African Reserve Bank’s (SARB’s) Monetary Policy Committee hiked interest rates in the country by 50 basis points in May, taking the repurchase rate to 8.25% and pushing the prime lending rate to 11.75%.

The latest rate hike marks the tenth in the current cycle, with the total adjustment being 475 basis points since the hike cycle started in November 2021.

Rates remain at their highest point in 13 years (June 2009), when the fallout from the global financial crisis weighed on the local currency.

As a result, the current hike cycle has made it more expensive for consumers to finance their debt, putting South Africans under considerable pressure.

In just over the last 18 months – when the hike cycle started in November 2021 – motorists are now paying 11% more for their monthly vehicle repayments.

The compounding effects of interest rate increases on car, home, credit card and other debt repayments are beginning to weigh heavily on consumers, said WesBank.

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, will now really start feeling the effects,” said WesBank.

Using an example of an entry-level vehicle that costs R250,000, financed over 60 months at an interest rate of 7%, the instalment amount at the start of the rate hike cycle would have been R5,043.

Purchasing that same vehicle at today’s hiked interest rate would result in a monthly repayment of R5,625 – a difference of R582.

While these incremental increases to the instalment seem small, their compounding effects add up over the lifetime of the finance agreement.

At the start of the rate cycle, those who purchased a R250,000 vehicle at 7% would be due to pay a total interest amount of R47,245. However, financing the same vehicle today at 11.75% would amount to a total interest of R82,170 – a 73.9% 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 +R582
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

However, It is also important to remember that the total cost of vehicle ownership is more than the initial price tag of the vehicle.

South Africans also need to account for the monthly repayments plus the added costs of fuel, comprehensive insurance cover, and general maintenance and service expenses.

To better understand the actual increase in car ownership in South Africa, WesBank compared the total cost of vehicle ownership over the past three years, from 2021 to May 2023.

For this exercise, WesBank took its average vehicle financing amount (approx. R280,000), which travels approximately 2,500 kilometres per month. It also included the average running costs of the vehicle, which included:

  • Monthly net instalment due;
  • Monthly fuel cost;
  • Monthly insurance; and
  • Monthly running cost (maintenance).

The combination of these costs was then represented as a total mobility cost, which WesBank calculated to be R7,715.94 in 2021 and R11,627.76 by May 2023 for the same car.

According to WesBank’s estimates, the actual cost of ownership has increased by 14% since November 2022 alone, while, over the past three years, the cost of car ownership has increased by a staggering 50.6% since 2021.

Read: The biggest roadblock for electric vehicles in South Africa – and it’s not load shedding

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