Linked or fixed interest rate? Which is better?

[Frikkenator]

Here are some interesting stats from Wesbank car finance calculator. This is a rate per 100,000 borrowed over 60 months. No residual or balloon payments.

At 9.5%
Interest paid: 26011.17
Instalment: R2100

At 10.5%
Interest paid: 28963.40
Instalment: R2150

My suggestion is if you can afford 10.5% interest then opt for the prime linked account but pay in what you would be charged at 10.5. This way you are reducing capital faster and hedging against a move as should it change dramatically the additional payments would counter this significantly.

That, is an excellent idea!!

You save money if it doesn't go up, and if does, you're covered.

 

[Dr Who]

Some more food for thought
if you get lucky and nothing changes the extra R50pm will result in your term being 58.2 months which means not only would you have saved R800 with of interest but also almost 2 months of theoretical premium

R50 x 58.2 = R2910
Vs 1.8 x 2100 = R3780

Another item which you should look into is ensuring that as little as possible is capitalized in terms of costs or extra's. A tow bar here and the admn fee there. R2000 over 5 years at 9.5% will cost over 3000 in the end.

 

[kewalp]

thanks for all your help guys really appreciated it

 

[sSslik]

kewalp: I don't think you're going to get a better 'what-if' example than what bboy gave you.