i am buying a new car. i have been offered a linked interest of prime + 0.5% so at the current interest rate that would be 9.5% and a fixed interest rate of 10.5%. the term is over 60 months. which is better with the current situation of our economy?
-
Join the MyBroadband community
South Africa’s biggest forum. Discuss, discover, and connect with thousands of members.
-
Question of the Day: How frequently are you watching FIFA World Cup 2026 matches?
Linked or fixed interest rate? Which is better?
- Thread starter kewalp
- Start date
Greg C
Well-Known Member
General idea of economics is to balance interest rates to inflation
decrease the interest and we feel inflation increase,increase interest and we decrease inflation.
Current economy I dont see the interest rate changing atleast within the next 12 months.However Never finance something on a variable amount,not knowing what next month will bring should curb your hunger for that 1% current interest saving which in the end is not comparable to the possibility of you being out of pocket for an increase in interest you cannot afford
FInal advice:Take the fixed interest rate and or attempt to negotiate further to reduce the interest on that fixed rate,either way you cant budget on a moving target of linked interest.
Hope this helps and you enjoy your new fancy car
Lostee
Well-Known Member
I
That's how it works in the world of economic theory. Never really seems to translate well to the real world.
Greg C
Well-Known Member
Il drink to that comment. Just saying thats the idea as Im sure you're aware.Either way in in a practical world more related to my point it is easier to budget on a still target(Fixed interest) than a moving target (linked).