Brian Joss –
WesBank said the Reserve Bank’s decision to hike the interest by 25 basis points, the repo rate to 6%, and the prime lending rate to 9.5% will affect buyers who have vehicle finance agreements structured around a linked interest rate. Interest on these loans will be recalculated, and account holders will be notified of the increase in their monthly instalment.
“Although this increase is minimal, with a minor effect on the monthly instalment, buyers should not downplay any hikes in the interest rate,” says Rudolf Mahoney, head of brand and communication at WesBank. “Those with other debts – such as credit cards and home loans – will find themselves with less disposable income.”
For a car loan of R250 000, financed over 60 months at an interest rate of 10.5%, the interest rate will now be 10.75%, resulting in a monthly instalment that is R31.15 higher, at R5486.13.
Consumers who have home loans will be more severely impacted, and those who have additional debt will find the increased loan repayments eating into their disposable income. South African household debt levels remains high, which is affecting consumer credit profiles as well as their ability to obtain new credit.
“This hike in the interest rate, combined with a depreciating rand, will continue to affect living costs and put pressure on consumers’ highly constrained budgets,” says Mahoney. “The net result is that consumer confidence will remain subdued, ultimately impacting new vehicle sales and the GDP.”