Is it a good idea to buy a car right now in South Africa?
Despite the fact that used car prices are returning to pre-pandemic levels, relatively speaking, and the new car supply chain has stabilised, the raised interest rate and slow economic activity means that it's a difficult time to decide whether to buy a car or not. Let's see how we can help you.
We are frequently asked here at AutoTrader when it is the best time to purchase a vehicle. More recently, with the economic slowdown and interest rate hikes, we've had more queries about whether now is a good or a bad time to purchase a vehicle. Let's explore the topic and see what conclusion we can arrive at. If you are looking to buy a car, but need to sell your current vehicle first, we can get you an Instant Offer from one of our trusted dealers!
Related: What's a good interest rate on a car loan in South Africa?
Is it a good time to buy a car in South Africa?
The short answer is no, the inflation rate at the time of writing was 10.75%, some 3.75% higher than it was less than two years ago, meaning that even an immaculate credit record still means that you will be paying an exorbitant amount of interest on your car loan.
The figures
If we take the average price of a vehicle as searched for by you, the consumer, as per our 2022 AutoTrader Annual Car Industry Report, we arrive at a figure of R505 866. Let's then calculate the monthly price of a vehicle of that price at 7% and then at 10.75% in order to determine both the difference in monthly instalments as well as the total interest paid. At 7% over 72 months with a 10% deposit, the monthly repayments will be R7 762 per month with a total interest payment of R103 589 while at 10.75% with the same parameters we have a monthly repayment of R8 608 and a total interest amount of R168 471.
So when should I buy?
Looking at what has been said by various economists recently and considering the fact that inflation has begun to decrease of late, we may have seen the end of the interest rate hikes for now. Our best advice would be to pay attention to the markets and wait for the economy to stabilise before pulling the trigger on a new car purchase.
