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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, InspectaCar Financial Services head. 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.
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.
Bulk up your budget
"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.
"We anticipate that buyers will either postpone vehicle purchases or exit the new market altogether in order to find better value the used market. Responsible financial planning and budgeting remain the best way to buy a car – whether consumers choose to use finance or buy cash," says White.
InspectaCar advises that a vehicle purchase requires budgeting for the long term – the average vehicle finance contract currently being signed is for 72 months. As such, consumers in the market for a car should consider all costs associated with motoring, and plan to have those costs as a part of their budgets for at least six years,” says White.
InspectaCar is changing the used-car dealer landscape. It is the only second-hand vehicle franchise certified by WesBank.
"We have created a unique experience for our customers. A one-stop-shop to complete the buying journey, from the online experience, the well checked car, transparency, dealing with professional and trustworthy staff, to the value-added products,” says Pertunia Sibanyoni, CEO of InspectaCar.
"In addition to selling cars, our dealerships provide finance, insurance, as well as other value-add essentials within the buying journey, creating a one-stop-shop and convenience for the customer,” concludes Sibanyoni.