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Buyer? Get ready for repayment shocks

2014-02-25 13:57

WEAK RAND TO AFFECT PRICES: SA’s troubling market conditions, plummeting rand and low consumer confidence could impact vehicle prices. Image: SHUTTERSTOCK

"Car-buyers are more concerned about the weak rand," claims Bidvest Bank, which believes it has the perfect tool to avoid disaster when buying a new vehicle.

It’s February 2014 and car buyers show little sign they’re prepared for a rising interest rate and may be in for a repayment shock later in the year, according to the asset finance division of Bidvest Bank.

This "consumer alert" issued by the finance company coincides with the announcement that it claims to have developed South Africa's “most comprehensive digital toolkit for calculating tax, running costs and repayment when buying a new car.”

INTEREST RATE IMPACT

It can tell users finance repayment levels over various periods and interest rates; not only the current prime rate but at higher rates should they increase again, as some economists predict.

Byron Corcoran, the bank's fleet and asset finance manager, says that in most cases, customers do not gather sufficient financial data before walking into vehicle showroom. Bidvest also claims that it’s rare for a would-be buyer to calculate interest rate impacts above the prime rate.

Bidvest claims that given SA vehicles sales in January and the weak rand, car-buyers believe they should purchase a new vehicle before vehicle prices increase.

Corcoran added: “Our reading of the situation following the end-of-January rate increase is that car-buyers are more concerned about the weak rand. They expect rand weakness to drive up vehicle prices so it makes sense to buy sooner rather than later.

“It’s also prudent to consider the interest rate climate.”

Bidvest’s tools cover tax implications, credit limits, vehicle price range, monthly repayments and running costs.

Click here to find out more about the tool.


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