The interest rate on vehicle finance is normally higher than on a home loan. If you have additional funds available on your home loan you can use the funds to purchase your car cash. You will be saving anything from 3% to 8% depending on what the bank gives you. On a vehicle of R100 000 this will come to R2500 per year over 4 to 5 years. The finance cost on a vehicle of R100 000 is in the region of R30 000. With a 4% lower interest rate you will be saving around a third of the interest or R10 000. The above calculations are done with a home loan rate of 9%. Download the Finance Calculator to get more accurate calculations.
Make sure to pay the normal premium you would have paid on your car to pay back the amount over the same period of time.
If you do not have funds on your home loan to use or do not have the ability to get a home loan then you can by paying additional amounts on your car finance account. The interest is calculated on the outstanding amount. By paying only R100 additional on your car every month you can reduce the payment period with even more, and save more interest. At a monthly premium of R2500 this will save you R10 000 on a R100 000 initial loan. Download the Finance Calculator to find out how much you can save if you pay different additional amounts.