Interest rates are going up: what to check on your car repayment

If your car finance has a linked interest rate, the latest rate increase could lift your repayment. If you have a fixed-rate agreement, the same announcement does not automatically change the interest rate on your loan. The first thing to check is your finance agreement. Standard Bank’s explanation

The South African Reserve Bank has announced a 25-basis-point increase in its policy rate, taking it to 7.25% from 25 September 2026. That is a rise of 0.25 percentage points. It does not mean adding 25% to your debit order. SARB statement

Start with “fixed” or “linked”

A fixed rate stays at the agreed level for the period specified in your contract. A linked rate moves with the reference rate named in the agreement, commonly the lender’s prime rate. Standard Bank explains the different exposure to rate changes in its guide for first-time car buyers. Standard Bank’s explanation

The SARB policy rate is not necessarily the interest rate you pay. Read the rate on your own agreement and any notification from your lender. Ask when a change takes effect on your account and which debit order will reflect it.

There is little value in worrying about a neighbour’s repayment. Their balance, rate and remaining term may be quite different from yours.

A quarter-percentage-point increase, in rand

Here is a simplified illustration for someone with R250,000 outstanding and 60 monthly repayments remaining. Assume the annual interest rate rises from 11% to 11.25%, with no balloon payment.

The difference is about R31.22 a month.

This is our calculation, not a lender’s quote or a prediction for your account. It uses a standard monthly repayment formula, with payments at month-end. It excludes fees, insurance and other charges. Actual lenders may calculate interest daily, and the timing of a rate change can affect the amount due.

Both calculations assume the stated rate remains unchanged over the remaining term. The example isolates this one increase; it does not forecast future interest rates.

If your balance or remaining term differs, the rand amount will differ too. You cannot work out the new repayment simply by adding 0.25% to the old debit order.

A balloon needs its own calculation

A balloon is an amount left to pay at the end of the agreement. It lowers the regular instalments by deferring part of the repayment, but that amount still has to be dealt with. Check how interest applies to the deferred amount in your agreement. Standard Bank on finance options

Our example above has no balloon, so it will not reproduce an agreement that does. Ask your lender for an updated repayment schedule showing the monthly amount and the final amount due.

Keep those two numbers together when reviewing affordability. A manageable debit order today does not tell you whether the payment waiting at the end will be manageable.

Ask for these details before changing your budget

A short message to your lender can be more useful than a dozen online calculators:

• Is my agreement fixed or linked, and what is my interest rate after the change?
• What will my next repayment be, and when will it be collected?
• What balance, remaining term and balloon amount does the updated schedule use?
• If you offer a lower monthly payment, what would happen to the total amount I pay and the final payment?

Ask for the answers in writing so you can compare them with your statement. If you think you may struggle to make a payment, contact the lender before it falls due and ask what options are available for your account. Do not assume an arrangement has changed until it has been confirmed.

Give the car a full line in the household budget

For someone driving from Table View to town, the repayment is only one part of keeping the car on the road. Fuel, parking, insurance and maintenance all compete for the same salary.

Update the repayment once your lender confirms it, then revisit the rest of the monthly car costs. Our Cape Town commute-cost guide can help you put them on one page.

If you are shopping for a car, ask for a written quotation showing the rate, term, fees, monthly payment and any balloon. That gives you something concrete to assess instead of a monthly figure on an advert.

This article provides general information, not personal financial advice. Your agreement and lender’s confirmed figures determine what you owe.

Sources

• South African Reserve Bank: September 2026 Monetary Policy Committee statement. Source for the 25-basis-point increase and its effective date.
• Standard Bank: How to finance your first car. Background explanation of fixed and linked agreements; its historical rate announcement is not used as current news.
• Standard Bank: Understanding balloon payments. Background on balloon payments and the final amount due.

Sources checked on 24 September 2026. The repayment example was calculated independently by Motor Maat using the assumptions shown. Citing Standard Bank does not constitute a recommendation of its products.