With the current situation, you may find that you are spending more time at home and not driving as much as you used to. However, this actually might be the best time to buy a new car.
Head of Marketing andCommunication at WesBank Vehicle and Asset Finance, Lebogang Gaoaketse says that fuel prices are down between 20% and 25% and the demand for public transport has reduced by about 30%. This shows that people are moving around less.
Also, everyone is tightening their belts due to the state of the South African economy and it is more likely that people will buy a property as their big-ticket purchase especially as more of us are working from home.
However, in October 2020, 38 752 new vehicle sales were recorded by the National Association of Automobile Manufacturers of South Africa. This made it the 4th consecutive month (since the national lockdown on March 26th 2020) of sales growth by volume.
Taking Advantage of the Low-Interest Rate
The low-interest rate is the reason for this growth in South Africa. The South African Reserve Bank key repo rate in December 2020 was 3.5%, which means that consumers pay 7%, which is the lowest it has been since 1966. These rates are set to remain low for some time still.
Gaoaketse said that they expect the interest rates to stay low as the government attempts to stimulate the economy. For consumers, this means that they can buy a vehicle at the most affordable lending rates.
Make the Low-Interest Work for You
Keep in mind that the interest rate that you are charged on a loan is dependent on your credit risk, however, Automark says that whilst 7% isn’t what you will be offered by the bank, the interest rate will be linked to the repo rate when you finance a vehicle.
This means that when the repo rate decreases, so will the interest rate you pay. This explains why in 2020, Wesbank saw an increase in fixed-rate vehicle financing.
Whether you are looking to buy a brand new car or a pre-owned car, it is a great time to buy. However, it doesn’t mean you can go out and buy that unaffordable car, but you can take advantage of the low-interest rate and get a modest car that you will pay less for or pay off a lot quicker.