Are you wondering if this is the year to buy a car? You’re not wrong to weigh up whether now is the time to finance a vehicle or whether it makes more sense to wait. After all, the economy has been through the ringer for too many years to count. Lately, interest rates have reached their highest levels in over a decade, so it is completely valid to ask yourself:  

What’s the smartest move for your wallet? 

To help you make the best possible choice in a tough market, let’s look at what these rising interest rates actually mean for you. 

Let’s Talk Interest Rates 

The South African Reserve Bank (SARB) has been steadily hiking interest rates in recent years to combat inflation. As of mid-2025, the repo rate sits at 8.25%, pushing the prime lending rate to 11.75%. Now this may sound like gobbledygook, so in simple terms, what this means is borrowing money (like taking out a car loan) has become significantly more expensive.  

You’ll pay more interest on any debt – including vehicle finance – which affects your monthly payments and total repayment over time. 

How Interest Rates Affect Vehicle Finance 

Let’s break it down with an example. We’ve looked at a smaller loan amount of R250,000 and varied the interest rate only. As you can see from the table below, a seemingly low difference of 2% results in a difference of ±R250 per month, or R15,000 more over the full term.  

If you’re financing a more expensive vehicle, the impact is even greater. 

LOAN AMOUNT	INTEREST RATE	TERM	EST MONTHLY REPAYMENTS
R250,000	9.75% (2021 avg)	60 months	± R5,270
R250,000	11.75% (2025 rate)	60 months	± R5,520

So… Should You Wait? 

Well, whether you wait or take out vehicle finance now will depend entirely on your circumstances. While true, that’s not exactly a helpful statement, so let’s go through a few factors that will help you determine whether you should wait or not. 

You Should Wait If: 

• Your current car is still reliable and not costing you too much in repairs. 

• You have limited disposable income and need to reduce debt exposure. 

• You can wait for interest rates to stabilise (likely in 2026 or 2027, if inflation slows down). 

You Should Buy Now If: 

• Your current car is becoming unsafe or too expensive to run. 

• You’ve found a low-interest or fixed-rate finance offer (some banks and dealerships still offer these). 

• You qualify for a good deal on a certified pre-owned vehicle, which may be cheaper than new and depreciate slower. 

Tips To Find The Best Finance Deal 

The presence of rising interest rates doesn’t mean that vehicle finance is off the table. That said, it does mean that you should be smarter about how you borrow.  

In the first instance, we would urge you to check your credit score. A better credit often means better rates, so if you get a free report, you can see if there are improvements that can be made to get you in the best possible position to receive better rates.  

From there, you want to make sure that you compare your options carefully by shopping around for the best finance rates. Even a small difference in interest can save you thousands. And then we would ask you to consider a shorter loan term if you can afford it, because this will enable you to pay more monthly but less interest overall. 

One thing to avoid, if you can, is a balloon payment – unless you’re 100% sure you can cover it at the end. 

Lastly, think about whether the car you want is something you truly need right now. If buying a car is unavoidable, then don’t ignore the pre-owned vehicle market. Given the rise in availability of AA Certified Pre-Owned vehicles, you will certainly be able to find a reliable vehicle that is well worth the money. 

Feeling Informed? 

By approaching your decision strategically, you can still get behind the wheel without putting your future finances at risk. 

If you’re looking for more practical advice, budget-friendly ideas, and planning tools, like a free Vehicle Valuation Report to find out how much your current vehicle is worth, then please take a few minutes to explore.