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.
1. Toyota Hilux – 18,801 units
- Starting price: R356,600
- Monthly repayment before the hike cycle (7%): R6,080
- Monthly repayment right now (11.75%): R 6,925
- Difference: +R845 per month.
2. Ford Ranger – 11,726 units
- Starting price: R494,400
- Monthly repayment before the hike cycle (7%): R8,429
- Monthly repayment right now (11.75%): R9,601
- Difference: +R1,172 per month.
3. Toyota Corolla Cross – 10,604 units
- Starting price: R404,400
- Monthly repayment before the hike cycle (7%): R6,895
- Monthly repayment right now (11.75%): R7,854
- Difference: +R959 per month.
4. Isuzu D-Max – 10,000 units
- Starting price: R431,800
- Monthly repayment before the hike cycle (7%): R7,362
- Monthly repayment right now (11.75%): R8,386
- Difference: +R1,024 per month.
5. VW Polo Vivo – 9,936 units
- Starting price: R248,500
- Monthly repayment before the hike cycle (7%): R4,237
- Monthly repayment right now (11.75%): R4,826
- Difference: +R589 per month.
6. Toyota Hiace – 8,469 units
- Starting price: R543,900
- Monthly repayment before the hike cycle (7%): R9,273
- Monthly repayment right now (11.75%): R10,563
- Difference: +R1,290 per month.
7. Toyota Starlet – 8,355 units
- Starting price: R248,400
- Monthly repayment before the hike cycle (7%): R4,235
- Monthly repayment right now (11.75%): R4,824
- Difference: +R589 per month.
8. Suzuki Swift – 8,193 units
- Starting price: R199,900
- Monthly repayment before the hike cycle (7%): R3,408
- Monthly repayment right now (11.75%): R3,882
- Difference: +R474 per month.
9. Nissan NP200 – 6,757 units
- Starting price: R226,000
- Monthly repayment before the hike cycle (7%): R 3,853
- Monthly repayment right now (11.75%): R4,389
- Difference: +R536 per month.
10. Toyota Fortuner – 5,995 units
- Starting price: R673,100
- Monthly repayment before the hike cycle (7%): R11,476
- Monthly repayment right now (11.75%): R13,072
- Difference: +R1,596 per month.
Read: How South Africans could save up to R700 on a tank of petrol
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