How much you’re saving on your car loan in South Africa following the latest interest rate cut

 ·22 Sep 2024

The South African Reserve Bank (SARB) has reduced interest rates, bringing some savings to car owners in South Africa—and more are likely to follow.

Yesterday, September 19, the SARB’s Monetary Policy Committee (MPC) unanimously decided to drop the repo rate by 25 basis points from its 15-year high of 8.25% to 8.0% – in line with expectations.

The prime interest rate thus also dropped from 11.75% to 11.50%.

Reserve Bank governor Lesetja Kganyago said that the MPC reached a consensus of a 25 basis point cut, stating that a less restrictive stance was consistent with sustainably lower inflation over the medium term.

The latest inflation print for South Africa in August was 4.4%, a three-year low, and below the SARB’s target midpoint of 4.5%.

The rate cut follows similar moves from other international central banks. The US FED cut interest rates by 50 basis points a day before the MPC’s decision.

South African assets have performed relatively well in recent months. The rand has strengthened more than many of its emerging market peers, while long-term yields have moderated and spreads over US rates have narrowed.

The terms of a car loan depend on several factors, so we have decided to look at the value of a car with no deposit or trade-in and a prime-linked interest rate.

According to WesBank, the average amount for a new vehicle financed through their institution was approximately R410,000. 

Using Wesbank’s fiance calculator, the average South African car purchaser would save R51 monthly on car repayments with the 25 basis point cut in interest rates.

The savings increase as the car’s value rises, with a R500,000 car saving R63 per month, while a R1 million car would save R126.

Further savings can be expected following the SARB’s latest decision.

Kganyago noted that the SARB’s forecast sees rates moving towards neutral next year, stabilising slightly above 7%. This means that another 75-100 basis points worth of cuts are on the cards for South Africa.

The savings on vehicles following the latest interest rate decrease can be seen below:

Value of the carJuly Rate (11.75%)Sep Rate (11.50%)Change
R175 000R3 966R3 944-R22
R200 000R4 519R4 494-R25
R225 000R5 072R5 043-R29
R250 000R5 625R5 593-R32
R275 000R6 178R6 143-R35
R300 000R6 731R6 693-R38
R350 000R7 837R7 793-R44
R400 000R8 943R8 893-R50
R410 000R9 164R9 113-R51
R450 000R10 049R9 992-R57
R500 000R11 155R11 092-R63
R550 000R12 261R12 191-R70
R600 000R13 367R13 291-R76
R650 000R14 473R14 391-R82
R700 000R15 579R15 490-R89
R750 000R16 684R16 590-R94
R800 000R17 790R17 689-R101
R850 000R18 896R18 789-R107
R900 000R20 002R19 888-R114
R950 000R21 108R20 988-R120
R1 000 000R22 214R22 088-R126
*Wesbank Finance Calculator

Read: 10 worst areas for hijacking in South Africa – and the cars being targeted

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