Car owners - you need to pay closer attention to your monthly expenses

Taking shortcuts in your car-buying journey won’t end well…

With the announcement of an increase in the interest rate, South African consumers now have to pay closer attention to their monthly expenses than ever before, says Jason White, Head, InspectaCar Financial Services. Taking any shortcuts when planning their car-buying journey could result in a situation where they’re unable to afford rising mobility costs.

“The rate hike will affect car owners 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,” says White.

Also read: How your driving style affects your budget 

According to White, given the current economic conditions this hike comes as no surprise. But it will not be welcomed by consumers as household budgets are under tremendous pressure, electricity costs are on the rise and water is soon to cost more.

“Every time there’s a 25 basis points rise, a vehicle’s monthly instalment changes by R45 for every R250 000 financed. Should the rates increase again in a few months’ time, which economists are predicting will happen, these small hikes add up. This is an excellent example of why we urge consumers to build some fat into their car-buying budgets,” adds White.

Buyers who don’t have the ability to purchase a new vehicle that meets their requirements can find what they need – and what meets their budget – in the used car market.

According to White, more and more consumers are considering used cars, evidenced in car finance application volumes: for every person applying to buy a new car, two others are applying to purchase a used car.