South African car buyers are increasingly opting for longer-term financing contracts, with nearly 90% of 2025 deals spanning six years or more, resulting in them paying more in the long term.
According to Lightstone’s analysis of data gleaned from its Signio platform, light motor vehicle buyers are opting to finance their purchases over longer-term contracts.
“In 2015, the 72-month repayment window accounted for 73% of deals, and this six-year window has remained the standard with respect to vehicle financing,” said Lightstone Auto Data Analyst Andrew Hibbert.
It grew to as high as an 87% share in 2020, before moving back down into the 70s, with a 72% share currently in 2025.
Ten years ago, 60 months was the second most popular financing window selection with a 17% share of the market, and 48 months was in third place with 3%.
This means that, in 2015, close to 100% of the financed vehicle space was made up of deals lasting six years or less.
Fast-forward to 2025, and the second most popular financing term, with 10% of market share, is now 96 months – the longest financing window on record, according to Lightstone’s data.
The 60-month term retains a spot in the top three, but the 84-month repayment period is now fourth on the list.
So far in 2025, 89% of all vehicle purchases financed have been signed for terms of six years or more, a significant shift from 2015.
There are two consequences from this significant shift towards longer-term financing contracts since 2015.
First, although repayments are smaller and potentially more manageable for the buyer, it is important to remember that the interest portion of the total repayment amount will be higher.
Second, the buyer will also have a repayment obligation to the financing institution for a longer period.
The graph below, courtesy of Lightstone, shows the trends in loan periods for vehicles between 2015 and 2025.
Longer loans risk finances
While it may be tempting to opt for a longer loan period, which requires smaller payments every month, Old Mutual explained that buyers really end up paying more over the long term.
“As with most loans, it’s generally in your favour to pay it off sooner,” Old Mutual said. “The National Credit Act gives you the right to increase your monthly premium and to settle the amount early without penalties, if the loan amount is less than R250,000.”
If the buyer pays in a lump sum, the credit provider has to recalculate and give them the benefit of a smaller instalment or shorter term.
“When you start repayments on your car loan, you owe more than the car is worth. The length of this payment stage depends on the size of your premium and the car purchased,” Old Mutual explained.
“Until you reach the point where you have equity on the car, you’ll have trouble selling it if you need to; a buyer will only pay the vehicle’s worth, not what you owe.”
Buyers who choose a market-linked interest rate also need to be prepared that their total debt will increase when the prime lending rate goes up.
“It is common for first-time buyers to be caught off guard when interest rates rise,” said Standard Bank’s Head of Money Management and Advisory, Doret Jooste.
She added that, in recent years, the rising cost of living has made this situation even more challenging.
According to Standard Bank, around 5.7% of first-time buyers fall behind with their repayments or change to a more affordable car within the first 12 months, a phenomenon which has been increasing in recent years.
Fortunately, there are ways that consumers can manage their car repayments and save money in the long term. “Paying off a car loan early saves you money in interest and boosts your credit rating,” Old Mutual said.
“If the debit order for your car loan goes off on the 1st of the month, move it closer to pay day, which is the 25th for most South Africans. This could save you a little extra.”
Balloon payments, which allow buyers to pay a smaller monthly payment in exchange for a lump sum at the end of the loan period, are another common tactic used to make car purchases more affordable.
However, this option also needs to be managed and considered carefully, as it could leave South Africans in a bad position if they cannot afford their final payment.
“If you opted for a balloon payment, put something away in a savings plan towards the amount or better yet, have a sum saved up to put as a deposit for your vehicle. And don’t skip payments, even if it’s allowed,” Jooste said.