How vehicle finance works in South Africa
Vehicle price − deposit = amount financed
The lender charges interest on the amount financed over the term you choose (here, 12 to 72 months), and you repay it in equal monthly instalments. If you add a balloon payment, part of the balance is left over and due as one amount at the end of the term.
What interest rate should I use?
The calculator starts at 13%. That's a GuideStation assumption: it isn't linked to prime and doesn't move when the SARB changes rates.
Lenders usually price vehicle finance relative to the prime rate, currently 10.75% (South African Reserve Bank, effective 25 September 2026), plus or minus a margin that depends on your credit profile, the vehicle and the deal. If you've been quoted a rate, enter that instead.
What does a balloon payment do?
A balloon (or residual) moves part of what you owe to the end of the loan. Your monthly instalment drops, but the balloon is still owed as a lump sum when the term ends, so you'd need to settle it, refinance it or trade the car in.
It doesn't make the car any cheaper. Because more of the balance stays outstanding for longer, you usually pay more interest overall. Try a balloon above and compare the total interest.
Deposit or balloon?
Both lower your monthly instalment, in opposite ways. A deposit reduces the amount you finance from the start, so there's less to pay interest on. A balloon keeps the full amount financed and pushes part of the repayment to the end, leaving a debt you'll still have to deal with then.
Why a lower instalment can cost more overall
A longer term lowers the instalment but adds months of interest. A bigger balloon lowers it by leaving more to pay later. A higher rate raises both the instalment and the total. So when you compare deals, look at the total interest and the total repaid, not just the monthly figure.