What this means is that the increases will affect existing buyers with vehicle finance agreements structured around a linked interest rate.
Therefore, the interest on these loans will have to be recalculated, leading to an 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,” said 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,” added Mahoney.
Wesbank provided a great example of how this hike will affect a person. For a car loan of R250 000, financed over 60 months at an interest rate of 10.5 percent, the interest rate will now be 10.75 percent, resulting in a monthly instalment that is R31.15 higher, at R5 486.13.
The people who will really feel the increase are home owners and people with other debt to pay as the belt which squeezes out the occasional sum of disposable income is forever being tightened. South African household debt levels remain high, which is affecting consumer credit profiles as well as their ability to obtain new credit.