Bad news for South Africans with car loans

South Africans with car loans have been urged to calculate what the year’s two previous interest rate hikes have added to their monthly bill and have been warned of a potential third hike on 19 November.

The South African Reserve Bank (SARB) raised the repo rate to 7% in May and to 7.25% in September 2026, increasing the prime lending rate to 10.75%, from 10.25% at the start of the year.

According to National Debt Advisors (NDA), household budgets were already stretched by fuel, food and electricity costs, meaning an extra 0.5-percentage-point hike has landed on top of budgets with no room left to give.

Ahead of the Monetary Policy Committee’s (MPC’s) announcement on 19 November, NDA Head Sebastien Alexanderson said many households still haven’t worked out what the last two hikes cost them.

“Most people hear ‘a quarter of a per cent’ and think it’s small. It isn’t, when it comes out of the same salary every month,” explained Alexanderson.

“Two hikes mean the bond and the car loan both cost more, and the money has to come from groceries, school costs, or savings that are already thin.”

To help make this calculation easier, NDA calculated what the two previous hikes have added to the most common loans South African households take out, assuming both are priced at prime, and the rate rose from 10.25% to 10.75%.

According to the National Debt Advisors, the most common loans and their monthly cost changes are as follows:

• R1 million bond over 20 years: The monthly repayment has gone from R9,816 to R10,152. That is R336 more a month, or about R4,030 a year.
• R300,000 car loan over 60 months: The monthly repayment has gone from R6,411 to R6,485. That is R74 more a month, or about R890 a year.

For anyone with both of these monthly expenses, the last two rate hikes have added R410 per month to their repayments, which totals about R4,900 extra per year.

What to do ahead of 19 November

If the MPC announces another 25-basis-point increase after its 19 November meeting, the prime lending rate will reach 11%, adding a further R170 to a R1 million bond and R37 to a R300,000 car loan.

In total, this will add over R200 per month to a household bill, or around R2,500 per year extra across both, meaning the three hikes would have added nearly R7,500 in additional yearly costs.

“Every hike lands hardest on people who are already close to the edge,” said Alexanderson.

“Our analysis of 109,425 clients who have entered debt review since 2014 shows the average client earns R15,737 a month and owes R174,787, and 98% hold at least one unsecured agreement.”

He added that when interest rates move, most households have nowhere left to cut costs.

The NDA shared five steps every household should take ahead of the MPC’s 19 November announcement:

• Work out your own number: Add up what your bond, car and other loans cost you today, and what they would cost at 11%.
• Call your lender early: Ask about options before you miss a payment, not after.
• Don’t borrow to cover repayments: A new loan or card to pay an old one makes the next hike harder to survive.
• Cut the smallest debts first: Clearing small accounts frees up cash that you can use to cover higher repayments.
• Check if you qualify for debt review: Use a debt review calculator to see whether one affordable monthly payment could replace several.

“You can’t control what the Reserve Bank decides, but you can decide to look at your numbers now, instead of waiting for the decision to scare you into it,” said Alexanderson