OUR country’s recent downgrade to junk status is apparently set to impact every individual in many ways.
Here is how the downgrade will affect car owners.
Paying more at the pumps
A car’s fuel efficiency will become an increasingly important factor, when expectant rises in petrol prices are taken into account.
Owing to a weakening Rand, oil will become more expensive for South Africa to purchase, thus increasing petrol prices.
While these increases will affect all motorists, those with ‘gas guzzlers’ will ultimately pay a higher price.
The AA has already forecast a petrol increase of up to 55c/litre in May.
Diesel and paraffin are expected to rise by 39c and 41c/litre respectively.
The AA said the decline in the Rand accounted for 75% of these increases.
Higher maintenance and insurance costs
According to the TransUnion Vehicle Pricing Index Report for this year’s first quarter, maintenance costs will increase owing to the increase in imported parts.
This is, once again, a result of the weakening Rand.
‘For the short-term insurance industry in particular, this means the cost of motor parts, which are mostly imported, will increase exponentially.
‘This is likely to lead to increased repair costs followed by increased premiums for policyholders,’ said Viviene Pearson, Chief Executive of the South African Insurance Association.
An increase in car loan repayments
Interest rates have remained steady at a lending rate of 10.5%, however, this is set to increase in July to 10.75%.
This 0.25% increase could add thousands of Rands to existing loans, depending on the loan amount, its interest plan (fixed or compound) and the payment period.
Car prices set to rise
Once again, owing to the weakened Rand, car prices will increase in addition to lending rates.
So, not only will people be paying more interest on their loans, but will have to take out a larger loan at the outset.
According to the TransUnion Vehicle Pricing Index, all car prices have increased over the past year.
‘The TransUnion SA Vehicle Pricing Index (VPI) for new and used vehicle pricing increased to 8.8% and 3.7% in Q1 2017, from 6.6% and 2.2% in Q1 2016 respectively’.
‘Consumers in the new buying cycle will be under severe strain as their disposable income decreases,’ said TransUnion.
Source: CompareGuru
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