The South African Reserve Bank (SARB) has reduced the repo rate by 25 basis points, providing much-needed relief for motorists taking on car loans.
The decision, announced after the Monetary Policy Committee meeting, brings the repo rate down to 7.00% and the prime lending rate to 10.50%.
The decision was in line with economists’ and analysts’ views ahead of the meeting, where opinions favoured a small reduction.
While some had anticipated a hold on rates, given the imminent application of a 30% tariff on exports to the United States from Friday, 1 August, the MPC followed through with a cut, wrote BusinessTech.
The vote was unanimous, with Reserve Bank governor Lesetja Kganyago stating that global economic conditions remain uncertain amid the USA’s decision to introduce new tariffs at a time when local consumers are already under pressure.
Inflation has remained low, but expectations have been revised, suggesting that headline inflation will rise over the next few months, averaging out to 3.3% for the year.
The end result is a net positive for South African motorists, as a lower lending rate means a reduction in their monthly car repayments.
The following table shows how much the new prime interest rate of 10.50% will affect your monthly car finance instalment, based on a 72-month contract with no deposit or balloon payment:
| Car price | Monthly instalment at 10.75% | Monthly instalment at 10.50% | Difference |
|---|---|---|---|
| R100,000 | R1,982 | R1,970 | – R12 |
| R200,000 | R3,873 | R3,847 | – R26 |
| R300,000 | R5,764 | R5,725 | – R39 |
| R400,000 | R7,654 | R7,603 | – R51 |
| R500,000 | R9,545 | R9,481 | – R64 |
| R600,000 | R11,436 | R11,359 | – R77 |
| R700,000 | R13,326 | R13,237 | – R89 |
| R800,000 | R15,217 | R15,115 | – R102 |
| R900,000 | R17,107 | R16,993 | – R114 |
| R1.0 million | R18,998 | R18,871 | – R127 |
| R1.1 million | R20,889 | R20,749 | – R140 |
| R1.2 million | R22,779 | R22,626 | – R153 |
| R1.3 million | R24,670 | R24,504 | – R166 |
| R1.4 million | R26,561 | R26,382 | – R179 |
| R1.5 million | R28,451 | R28,260 | – R191 |
| R1.6 million | R30,342 | R30,138 | – R204 |
| R1.7 million | R32,233 | R32,016 | – R217 |
| R1.8 million | R34,123 | R33,894 | – R229 |
| R1.9 million | R36,014 | R35,772 | – R242 |
| R2.0 million | R37,904 | R37,650 | – R254 |
A welcome move
The National Automobile Dealers Association (NADA) applauded the Reserve Bank’s decision to cut interest rates.
“The National Automobile Dealers’ Association (NADA) welcomes this decision, which offers meaningful relief to consumers and businesses alike in a persistently challenging economic climate,” said Brandon Cohen, Chairperson of NADA.
“Lower interest rates enhance vehicle affordability and will help energise demand in both the new and pre-owned vehicle markets, particularly in cost-sensitive segments.”
The local car sector has been experiencing solid growth throughout 2025, reporting a year-on-year improvement of 15.6% this July.
The uptick in sales is partially attributed to the SARB’s decision to reduce interest rates multiple times, thereby lowering the cost for consumers looking to buy a car.
Cohen noted that this is likely to be the final window for monetary easing in the short term, as inflation has remained stable within the SARB’s 3% to 6% target range for nine consecutive months.
“The automotive retail sector remains resilient, and dealers continue to support customers through tailored finance solutions and value-driven offerings,” he said.
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