Buying a vehicle now - linked or fixed interest rate?





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  1. #1
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    Default Buying a vehicle now - linked or fixed interest rate?

    I'm by no means an economist, so some input needed.

    SWAMBO is buying a new (used) car, there's less than 1% difference between the two or roughly R125pm.

    What would you do?
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Fixed.

    The low interest rate we have currently will not stay this low
    Last edited by Oppies3800; 2020/10/27 at 09:27 AM.
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Fixit!!! It is definitely going to rise in the 60months of repayment, but only if it stays fixed for the whole term. It they say for 24 months only, I dont think you'll really benefit

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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Is it fixed for the entire term?

    Check this nice blog post doing the calculations: https://www.stealthywealth.co.za/201...is-broken.html

    BUT - rates are really low at this stage and doubt whether the risk of a significant drop is higher than a significant jump over the next 5 years...

    So in short, I would have fixed (as long as the rate is a good one, not something crazy like prime +3).
    Last edited by Groenman; 2020/10/27 at 09:32 AM.
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Full disclosure, the fixed rate is 8.7%.

    Also, we've never kept a vehicle for 5 years. I'd say 3 years MAX.
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    I might be wrong but I remember reading that the rate is the lowest for a very long time. Difficult to see it dropping a lot from what it is now. But like said check the rate offered. In a load agreement there are many other issues to look at: all small print, if you win a Lotto is there an option to pay lump sum, length, balloon at the end...

    Cool head and reading are most probably more important than interest rate only.

    If I was buying:
    - Is the value under the limit where you can pay the loan off without penalty
    - Do I get discount on the car if I take finance

    If yes for both I would take the finance and pay it off in full the next day

    If no discount = cash

    In all other cases I would buy fixed with very short payment (not longer than 36 months). I cannot see to the future but 3 years is reasonable. We live in a strange world.
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Quote Originally Posted by Oppies3800 View Post
    Fixed.

    The low interest rate we have currently will not stay this low
    ^^^^ what he said
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Quote Originally Posted by Kix View Post
    Full disclosure, the fixed rate is 8.7%.

    Also, we've never kept a vehicle for 5 years. I'd say 3 years MAX.
    Push them, just got 7% linked, or 7.25% fixed over 48 months.

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  10. #9
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Quote Originally Posted by Dirk View Post
    Push them, just got 7% linked, or 7.25% fixed over 48 months.
    ######, do you own the bank?

    Also, they just confirmed the fixed rate is for the full term.

    FWIW, Petri (Oostfin) is doing the finance.
    Last edited by Kix; 2020/10/27 at 09:47 AM.
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Quote Originally Posted by Kix View Post
    Full disclosure, the fixed rate is 8.7%.

    Also, we've never kept a vehicle for 5 years. I'd say 3 years MAX.
    I would fix at that.

    I benefited from the rate drops - bought the Suzuki in Jan 2019 at 9.5% (Prime - 0.75%) and now it's down to 6.25%, which is great!
    Stephan G

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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Avoid balloon /residual contract agreements. Read up of too many tears and heart ache. You may pay a bit more for fixed, but it may save you. Try and see if you can get capped interest rate(maybe this is only for house loans). Also see if you can pay it off quicker without penalties as mentioned in other posts.
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Quote Originally Posted by hunter26 View Post
    Avoid balloon /residual contract agreements. Read up of too many tears and heart ache. You may pay a bit more for fixed, but it may save you. Try and see if you can get capped interest rate(maybe this is only for house loans). Also see if you can pay it off quicker without penalties as mentioned in other posts.
    No residuals, putting down a small deposit.
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Quote Originally Posted by Kix View Post
    ######, do you own the bank?

    Also, they just confirmed the fixed rate is for the full term.

    FWIW, Petri (Oostfin) is doing the finance.
    Choose the one where he makes the most...
    Always think: Could this be sarcasm?

    André Opperman

  15. #14
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    Default Re: Buying a vehicle now - linked or fixed interest rate?

    Then fix it.

    Odds are it will raise more than 1% in 3 years

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