Interest rates have an important impact on the economy and on the cost of living. They are also important for investors as they affect returns and risk levels.
The interest rate is set by the Reserve Bank of South Africa (RSA) and typically changes every month. The current interest rate is 6% so an individual with a loan of R1,000 would pay R60 per month in repayments.
The interest rates in South Africa 2018
The interest rates in South Africa have been on a downward trend over the past few years, with the average interest rate at 5.97% in December 2017. However, when looking at the difference between the banks’ prime and those offered to retail customers, we find that there is still some room for savings. It must be noted that these are bank rates and are not regulated by any financial institution. A quick visit to your local bank will show that with a loan of R2 million (a conservative estimate) you’ll pay an average of R227 000 per month with a one-year term, while a small business loan of R150 000 will cost you just R10 500 per month or R180 000 over its duration – this is because they use an alternative lending model where they offer different terms based on how much money you can put into your business and how it will be used.
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