Payback period on car loans growing, says TransUnion
The average payback period for new passenger vehicles was steadily increasing, said TransUnion business development director Nick Tuttelberg on Tuesday.
Speaking at the TransUnion Auto Trends Forum in Johannesburg, he said 53% of buyers opted for a payback period of 61 to 72 months in 2013, compared with 42% in 2008.
Twenty-four per cent were settling their car debt in more than 72 months, compared with 4% in 2008.
Tuttelberg said asset financier WesBank had also reported a sudden increase in balloon payments this year, with the balloon payment itself also increasing.
The contract terms for used vehicles reflected a similar trend, with 55% of people opting for a payback period of 61 to 72 months, compared with 37% in 2008. Sixteen per cent chose to pay back their vehicles over more than 72 months, compared with 13% in 2008.
Used vehicle sales in the R1 to R200 000 band were also tapering off compared with 2012, noted Tuttelberg, but sales in the R201 000 to R500 000-plus ranges were increasing.
The highest growth in new vehicle sales were in the R500 000-and-above segment.
Fuel costs were growing fast, added Tuttelberg, with monthly fuel costs almost as high as the car repayment.
According to a WesBank study, fuel costs made up 28.51% of total vehicle mobility costs in 2007. Monthly running costs were at 4.67% of total costs, monthly insurance at 14.66%, and monthly net installment at 52.13%.
In 2013, the monthly installment made up 43.46% of the monthly costs of operating a vehicle, with fuel costs at 37.75%. Monthly insurance was at 13.47%, and monthly running costs at 5.3%.
The data was compiled using a mass-entry-level car costing R100 000 in 2007 (adding inflation every year), financed at prime+2% over 54 months with no balloon payment, with the vehicle travelling 2 500 km a month, consuming 7 l of petrol per 100 km travelled.
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