This article delves deep into the vehicle finance interest rates in South Africa in 2025, covering everything from current interest rate ranges and lender comparisons to tips for securing better terms and avoiding hidden traps.
Buying a car is one of the biggest financial decisions most people make—right up there with purchasing a home or investing in a business. In 2025, South Africans are still largely relying on vehicle financing to make this dream a reality, but with changing market dynamics, interest rates have become a hot topic. Understanding these rates, how they vary, and how they affect your total repayment is crucial for making smart, informed decisions.
Vehicle Finance Interest Rates In South Africa
In 2025, vehicle finance interest rates in South Africa range widely based on several variables, including your credit score, income stability, the car’s age, and the type of financing you choose. Here’s a general breakdown:
New cars: Interest rates range from 9% to 15%
Used cars: Rates generally sit between 10% and 20%
This variation reflects both market conditions and personal risk factors. Banks offer better rates to borrowers with excellent credit scores, solid financial profiles, and larger deposits.
Lender Comparison: What Are the Banks Offering?
Different lenders offer different packages, and choosing the right one can save you money. Here’s a look at some of the top vehicle finance options available as of June 2025:
| Lender Interest Rate (APR) | Loan Term | Loan Amount | Range |
| First National Bank (FNB) | From 9.00% | 12–60 months | R30,000 – R250,000 |
| MFC (Division of Nedbank) | Around 10.00% | 12–96 months | R10,000 – R300,000 |
| Standard Bank | Around 10.25% | 12–84 months | R20,000 – R200,000 |
| WesBank | Around 13.00% | 12–96 months | R10,000 – R300,000 |
| Absa | Around 12.50% | 24–72 months | R10,000 – R250,000 |
| Mercantile Bank | Around 12.25% | Up to 240 months | R30,000 – R250,000 |
These rates are indicative and can change based on your financial profile and the lender’s risk assessment. The actual rate offered to you may differ from advertised rates.
New vs. Used Cars: Why the Rate Difference?
One of the main factors affecting your interest rate is whether the vehicle is new or used. Here’s why:
New cars generally come with lower interest rates because they are less risky for lenders. Their value is easier to estimate, and they are less likely to break down or depreciate rapidly in the early years.
Used cars often carry higher rates due to increased depreciation and uncertainty. The older the vehicle, the more likely it is that repairs or resale will be an issue, so lenders offset that risk with higher interest.
If you’re looking to finance a vehicle older than 10 years, many banks may require shorter repayment periods or offer higher rates, so be prepared.
Understanding How Vehicle Finance Works
Before diving into the rates, it’s important to understand the fundamentals of vehicle finance. When you buy a car using finance, you’re essentially taking out a loan from a financial institution—such as a bank, credit union, or specialized vehicle finance company—to pay for the car upfront. You then repay the loan in monthly installments, plus interest, over an agreed period.
Interest is the cost of borrowing money, and it significantly affects your total repayment. Even a small difference in interest rate—say 10% versus 12%—can result in thousands of rands in extra payments over the life of a loan.
Factors That Influence Your Vehicle Finance Interest Rate
Several personal and vehicle-specific factors go into determining your final interest rate:
1 Credit Score
Your credit score is arguably the most important factor. A high score—typically above 700—could qualify you for the best interest rates. A low score—below 600—might result in a declined application or significantly higher rates.
2 Deposit Size
A larger deposit (e.g., 10–20% of the vehicle price) reduces the amount the lender has to loan, making you less risky. It also gives you leverage to negotiate better terms.
3 Repayment Period
Longer loan terms (e.g., 72 or 96 months) can reduce your monthly payment, but they often come with higher interest rates. Shorter terms usually offer lower rates and save you money overall.
4 Income and Employment Stability
Your debt-to-income ratio and employment history give lenders insight into your ability to repay. Stable employment and consistent income can lead to better offers.
5 Vehicle Type and Age
As mentioned earlier, newer vehicles attract better rates. The make, model, and resale value of the car can also be factors—cars that hold their value tend to be viewed more favorably.
Fixed vs. Variable Interest Rates
Vehicle finance deals may come with either fixed or variable interest rates:
Fixed Rates: The interest rate remains constant for the entire term. Your monthly repayments are predictable, making budgeting easier. This is ideal when interest rates are expected to rise.
Variable Rates: The interest rate can change based on the repo rate set by the South African Reserve Bank (SARB). While you might start off paying less, rising rates can increase your repayments unpredictably.
Many South Africans prefer fixed rates for peace of mind, especially during uncertain economic times.
The Role of the South African Reserve Bank (SARB)
Interest rates in South Africa are heavily influenced by the repo rate, which is the rate at which the SARB lends money to commercial banks. As of mid-2025, the repo rate sits at 7.75%, down slightly from 8.25% in late 2024. Lower repo rates tend to result in more favorable consumer interest rates, although lenders always add a margin.
It’s wise to keep an eye on SARB announcements if you’re planning to finance a car soon—they give insight into where lending rates might go.
Practical Tips for Securing Better Vehicle Finance Rates
Shop Around
Never accept the first offer. Compare quotes from banks, dealerships, and independent brokers. A single percentage point can mean thousands saved.
Get Pre-Approved
Securing a pre-approval puts you in a stronger position when negotiating. It also helps you understand your budget clearly before walking into a dealership.
Improve Your Credit Score
Pay off outstanding debts, avoid late payments, and reduce your credit utilization. Even a few months of financial discipline can bump your score and improve your rate.
Make a Bigger Deposit
A 10–20% deposit not only reduces the loan amount but signals financial responsibility to lenders.
Avoid Balloon Payments (Unless You Must)
Some finance deals include a balloon payment—a large lump-sum at the end of your loan term. While it lowers monthly payments, it increases total interest paid and can leave you with a hefty final bill.
What About In-House Dealer Financing?
Many dealerships offer their own finance solutions or partner with banks for in-house financing. While this might be convenient, these deals can sometimes carry higher interest rates or hidden fees.
Always read the fine print and compare the total repayment amount, not just the monthly instalment.
Finance vs. Lease: Which Makes More Sense?
An alternative to buying is vehicle leasing, where you effectively rent the car for a set period (usually 24–48 months). Leasing has lower monthly payments and gives you the option to upgrade more frequently, but you never own the vehicle.
Finance gives you ownership once the loan is repaid, and it’s often the better long-term financial move—especially if you plan to drive your car for many years after repayment.
Real-Life Example: How Interest Affects Cost
Let’s say you’re buying a car worth R250,000 with no deposit and plan to repay it over 60 months (5 years).
At 9.5% interest, your monthly instalment is around R5,250, and your total repayment is roughly R315,000.
At 13.5% interest, your monthly instalment jumps to R5,750, with a total repayment of approximately R345,000.
That’s a R30,000 difference over 5 years—just because of a 4% difference in interest!
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Conclusion:
In South Africa, it is possible to get a good vehicle finance interest rate in South Africa contract from your bank or insurance company, as long as you have a good credit rating, and earn above the minimum wage. However, these car finance contracts usually have tenures that range between 12 and 72 months. The most important aspect of a car financing contract is the interest rate: please calculate extensively to ensure that the interest rate is something you can afford. It is important to know whether you are paying a fixed rate or a linked rate. If you decide to go for a balloon agreement please ensure that you purchase a vehicle that you can afford.