How much you’ll save on car payments after the latest interest rate cuts in South Africa

The South African Reserve Bank (SARB) has reduced the national repo rate by 25 basis points, providing much-needed financial relief for prospective car owners.

As a result, the prime lending rate has dropped from 11.0% to 10.75%, reducing the amount individuals will need to spend on the monthly instalments for a new car.

The decision was recently announced by the Monetary Policy Committee, where five members voted for a 25 basis point cut, and one member voted for an even greater 50 basis point cut.

Inflation has been tracking below SARB’s target range, which was included as a risk factor in the bank’s most recent calculations.

Consequently, the Reserve Bank opted to cut rates to bring some measure of relief to consumers.

The decision was also motivated by the government’s decision to withdraw the proposed VAT hike, which was factored into SARB’s risk calculations.

The end result is a net positive for South African motorists, as a lower lending rate means a smaller monthly car repayment.

The following table shows how much the new prime interest rate of 10.75% will affect your monthly car finance instalment, based on a 72-month contract with no deposit or balloon payment:

A big win for motorists

The decision to reduce interest rates has been welcomed by the National Automobile Dealers’ Association (NADA).

NADA Chairperson Brandon Cohen stated that the rate cut is a positive move, as South African consumers are facing major financial pressure.

“While it’s not a dramatic kick-start to the economy, it does serve as a much-needed nudge in the right direction,” he said.

While the 25 basis point cut is modest, translating to a savings of under R100 per month for most vehicle finance purchases, Cohen argued that the short-term relief is much-appreciated at a time when other costs are set to go up.

Petrol prices, for example, will be impacted by the decision to raise the General Fuel Levy, undermining the cost reductions motorists would have enjoyed this June.

“Even small savings on monthly bond repayments, credit cards, and vehicle finance do add up,” said Cohen.

“They can make a meaningful difference for consumers who are having to make every rand count.”

Cohen also mentioned that rate movements can often take several months before they make a visible impact in vehicle sales, but that they do make a tangible difference.

“A rate cut helps to build consumer confidence and creates slightly more room for discretionary spending,” he said.

Cohen remained cautiously optimistic, stating that while the interest rate is a positive indicator, it is not enough to stimulate growth in the local auto sector all by itself.

“Sustained economic strain and high unemployment remain significant barriers to growth in the automotive sector.”

“Any positive shift is welcome – but the road to recovery will require more than just lower interest rates.”

Even so, the South African car market is showing a strong improvement in 2025, with sales shooting up by 22% year-on-year between May 2024 and 2025.