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How COVID-19 has made your car more affordable - Media

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How COVID-19 has made your car more affordable

The interest rate has been cut to the lowest level in over 20 years

How COVID-19 has made your car more affordable

How COVID-19 has made your car more affordable

 

The interest rate has been cut to the lowest level in over 20 years, In January 2020 the key REPO rate was 6.25%. While this isn’t necessarily the interest rate you will be given by a bank when you finance a vehicle, your loan’s interest rate will almost definitely be linked to the REPO rate. That means that when the REPO rate goes down, so does the interest rate that you pay, by the same margin.

As a way to stimulate the economy, the South African Reserve Bank has during lockdown cut the REPO rate by a total of 2.5%, to 3.75%. The Prime lending rate, which is the rate the banks base their lending on, has dropped to 8.75%.

Your personal interest rate on loans is dependent on your personal credit risk, and will be stipulated at Prime plus x% or Prime minus x%. If the banks consider you to be low-risk you might get an interest rate of prime minus 2%, for example.

At the beginning of the year prime minus 2% would have equated to 9.25%. Now it would equate to 6.75%!

What does that mean in money terms? Here’s an example:

 

You bought a 2019 Toyota Etios 1.5 XS in January 2020 for R199 000 and paid a deposit of R19 900 (10%). You signed up to pay the Etios off over six years (72 months) at the prime interest rate.

 

In January 2020 your payment would have looked like this:

Interest rate on 01/01/2020 at prime: 11.25%

Monthly repayments: R3449

Total Payment: R248 344

Total interest: R68 344

 

In June 2020 your payment would have looked like this:

Interest rate on 01/06/2020 at prime: 8.75%

Monthly repayments: R3222

Total Payment: R232 006

Total interest: R52 006

 

That means that your monthly payments would have decreased by R227 a month, and over six years you would save R16 338. And if you are responsible and put that R227 a month into an interest-bearing account at just 3.5% every month you could end up with over R19 000 at the end of 6 years! Alternatively, keep paying the same amount (R3449) and you will pay your car off six months quicker!

 

To see a Vehicle Repayment Calculator and work out how much your new car will cost you every month, visit https://www.automark.co.za/finance/. 

 

 

 

How COVID-19 has made your car more affordable

 

The interest rate has been cut to the lowest level in over 20 years, In January 2020 the key REPO rate was 6.25%. While this isn’t necessarily the interest rate you will be given by a bank when you finance a vehicle, your loan’s interest rate will almost definitely be linked to the REPO rate. That means that when the REPO rate goes down, so does the interest rate that you pay, by the same margin.

As a way to stimulate the economy, the South African Reserve Bank has during lockdown cut the REPO rate by a total of 2.5%, to 3.75%. The Prime lending rate, which is the rate the banks base their lending on, has dropped to 8.75%.

Your personal interest rate on loans is dependent on your personal credit risk, and will be stipulated at Prime plus x% or Prime minus x%. If the banks consider you to be low-risk you might get an interest rate of prime minus 2%, for example.

At the beginning of the year prime minus 2% would have equated to 9.25%. Now it would equate to 6.75%!

What does that mean in money terms? Here’s an example:

 

You bought a 2019 Toyota Etios 1.5 XS in January 2020 for R199 000 and paid a deposit of R19 900 (10%). You signed up to pay the Etios off over six years (72 months) at the prime interest rate.

 

In January 2020 your payment would have looked like this:

Interest rate on 01/01/2020 at prime: 11.25%

Monthly repayments: R3449

Total Payment: R248 344

Total interest: R68 344

 

In June 2020 your payment would have looked like this:

Interest rate on 01/06/2020 at prime: 8.75%

Monthly repayments: R3222

Total Payment: R232 006

Total interest: R52 006

 

That means that your monthly payments would have decreased by R227 a month, and over six years you would save R16 338. And if you are responsible and put that R227 a month into an interest-bearing account at just 3.5% every month you could end up with over R19 000 at the end of 6 years! Alternatively, keep paying the same amount (R3449) and you will pay your car off six months quicker!

 

To see a Vehicle Repayment Calculator and work out how much your new car will cost you every month, visit https://www.automark.co.za/finance/.