Car finance a steep climb

CREDIT: WE'RE NOW IN AN FRA OF 30-YEAR HOME LOANS. FOUR-YEAR PHONE CONTRACTS

→ Banks are now stretching 96-month vehicle contracts.

A s South African consumers battle with affordability due to high inflation, record-high À interest rates and a broadly weaker currency over time (impacting the cost of imported goods), credit providers are offering vastly extended loan terms to make purchases more "reasonable" - in theory, at least.

The terms for vehicle finance offers have slowly stretched from a "standard" 60-month term to 72 months, which is increasingly the "default" on any finance offers.

These also include balloon payments in an attempt to further drive down the monthly repayment amount. So a six-year loan is now the norm with seven-year ones starting to be promoted on certain vehicles/brands.

However, vehicle finance contracts on offer from banks can now stretch to as long as 96 months (in the case of WesBank).

Balloon payments aren't allowed on finance terms longer than 84 months (seven years) and these are only available for vehicles less than two years old.