By Hennie Pretorius, journalist, Justmoney
According to research conducted by insight and information consultancy TNS South Africa on behalf of Standard Bank, interest rates have become less of a concern for consumers when deciding to purchase their next vehicle.
It has been reported that 66% of South Africans rely on vehicle finance, the most likely aged between 25 and 44, while 32% of those buying pay cash.
Nicholas Nkosi, head of vehicle and asset finance - personal markets at Standard Bank, said that South Africans are less concerned about interest rates because they have been stable historically.
However, the interest rates are set to go up: “With interest rates having already been raised by 50 basis points, and the uncertainty on whether or not we can expect further increases this year, it will be interesting to see how car buyers react to polls during the 2015 Standard Bank People’s Wheels survey,” said Nkosi.
The TNS research also revealed the following:
• 67% of respondents between the ages of 45 and 54 reported that they financed vehicles, while 32% paid cash.
• Buyers aged between 55 and 64 were more cash flush with 38% buying vehicles for cash and 58% (9% less than the younger 45 to 54 age group) opting for finance.
• The 65 plus age group was even more inclined to pay cash with 68% of respondents saying they paid cash for cars, and only 32% financing deals. This group, however, was also the most likely to retain cars for six years or more.
So what does this mean?
Nkosi explained: “These statistics indicate that people are more likely to pay cash for their vehicles as their socio-economic status increases.
People between the ages of 25 and 44 are generally coping with the costs involved with beginning full-time employment, buying property, starting and raising families, as well as paying for school and tertiary education fees.
However, people aged 55 and upwards have generally reached the peak of their careers, their highest income levels, and have more disposable income.”