How much interest you pay on a R500,000 car – TopAuto
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Sunday / 22 May 2022
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How much interest you pay on a R500,000 car

A budget of R500,000 when buying a new car gives you access to many options.

This includes the Toyota C-HR 1.2T Luxury, Nissan Qashqai 1.5dCi Acenta Plus, Mini Cooper S Hatch 5-Door, Mazda CX-5 2.0 Dynamic, and Ford Kuga 1.5T Trend.

If you are financing your car, however, the amount on the price tag is not the amount you will pay – as you have to take interest into account.

Financing a car

When financing a vehicle, the financial services provider you sign up with allows you to drive the car home and then pay it off in monthly installments over a set period.

This finance agreement is signed with an interest rate attached to it, and sees you paying a percentage of the financed amount on top of the total you owe.

To provide a practical example, we used the scenario below.

A car buyer wants to purchase Toyota C-HR 1.2T for R500,000, and will use financing from their bank.

They agree to a 5-year repayment plan at a 9% interest rate – and put down a 10% deposit.

No balloon payment or extras were included in the agreement.

  • New Car Price – R500,000
  • Payment Term – 60 months (5 years).
  • Interest – 9%.
  • Deposit – 10% (R50,000).
  • Balloon – No balloon payment.
  • Extras – No optional extra were fitted.

How much you pay back – 10% deposit

To calculate how much the car buyer in the deal above will pay back, we used WesBank’s vehicle finance calculator.

The calculator showed that.

  • The amount financed would be R450,000. (R500,000 new car price minus the R50,000 deposit.)
  • The car buyer would pay a monthly installment of R9,435 over 60 terms (5 years).
  • The total interest amount paid back would be R110,772.
  • The total cost of the finance agreement, including admin fees and a finance initiation fee, would be R566,119.

How much you pay back – No deposit

If you are not able to put down a deposit on the car and need to finance the full R500,000, the monthly installments and interest will be higher.

In this situation you would pay:

  • R10,473 per month in installments over 60 terms.
  • R123,047 in interest.
  • The total cost of the finance agreement would be R628,394
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