Interest rates in South Africa are at their highest point in years, and motorists who are still paying off their vehicles are certainly feeling the pressure in their pockets.
Depending on the price of your car, you’re paying anywhere from R75 to R1,487 more per month in April 2023 than in January 2020.
Even more noteworthy, you’re now paying between R209 to R4,135 more per month than in July 2020, when interest rates were at their lowest point in the past three years.
Interest rates – 2020 vs 2023
South Africa’s prime interest rate has fluctuated quite a lot since the beginning of 2020, starting at 9.75% in January and dropping to 7.00% in July during the height of the Covid-19 pandemic, where it stayed put until November 2021 when it rose slightly to 7.25%.
As lockdown restrictions eased, however, consumers started spending again and the lending rate immediately picked up, and since then it has experienced nine consecutive hikes to now sit at 11.25% in April 2023.
These movements are clearly visible in the following graph.
Click to enlarge
Car payments – 2020 vs 2023
If your monthly car payment is determined by a linked interest rate, it would have risen and dropped alongside the prime rate over the past few years.
The table below compares what you would have paid for a vehicle in different price brackets in January 2020 when the benchmark lending rate was 9.75%, in July 2020 when it was at 7.00%, and in March 2023 when it shot up to 11.25%.
The calculations were made based on a five-year contract with a linked interest rate, 0% deposit, and 0% balloon payment.
| Car price | January 2020 (9.75%) | July 2020 (7.00%) | March 2023 (11.25%) |
|---|---|---|---|
| R100,000 | R2,207 | R2,073 (-R134) | R2,282 (+R209) |
| R200,000 | R4,319 | R4,053 (-R266) | R4,469 (+R416) |
| R300,000 | R6,432 | R6,033 (-R399) | R6,656 (+R623) |
| R400,000 | R8,544 | R8,013 (-R531) | R8,842 (+R829) |
| R500,000 | R10,657 | R9,994 (-R663) | R11,029 (+R1,035) |
| R600,000 | R12,769 | R11,974 (-R795) | R13,216 (+R1,242) |
| R700,000 | R14,881 | R13,954 (-R927) | R15,403 (+R1,449) |
| R800,000 | R16,994 | R15,934 (-R1,060) | R17,589 (+R1,655) |
| R900,000 | R19,106 | R17,914 (-R1,192) | R19,776 (+R1,862) |
| R1,000,000 | R21,219 | R19,894 (-R1,325) | R21,963 (+R2,069) |
| R1,250,000 | R26,500 | R24,844 (-R1,656) | R27,430 (+R2,586) |
| R1,500,000 | R31,781 | R29,795 (-R1,986) | R32,896 (+R3,101) |
| R1,750,000 | R37,062 | R34,745 (-R2,317) | R38,363 (+R3,618) |
| R2,000,000 | R42,343 | R39,695 (-R2,648) | R43,830 (+R4,135) |
Keyword: How much you are paying in car instalments – 2020 vs 2023