Owning a vehicle in South Africa is more than just a status symbol. It’s a necessity for many, stemming from the challenges that continue to plague the country’s public transport system. However, beyond its primary purpose as a means of transport, vehicle ownership is also viewed by many as a means to secure a loan on favourable terms.
According to the latest Q1 2024 Consumer Credit Market Report, published by the National Credit Regulator (NCR), vehicles accounted for the largest share of security used by borrowers in South Africa, making up 49.32% of all secured credit agreements.
Other types of security presented include furniture and other durables (46.35%), insurance policies (1.41%) and retirement benefits (1.07%).
Lebo Gaoaketse, Head of Marketing and Communication at WesBank said: “A vehicle is sometimes discounted as a depreciating asset. However, the long-term benefit of owning a paid-off car is evident, as demonstrated in the NCR’s latest Consumer Credit Market Report. It is for this reason that consumers are encouraged to act responsibly when faced with financial difficulties to avoid the repossession of their vehicle.”
When befallen by financial difficulties, maintaining a good credit history and credit score should always be a priority.
“Try to restructure your spending to prioritise the basics and cut down on non-essentials like entertainment and eating out,” says Gaoaketse.
It’s always important to consult your vehicle finance provider as soon as possible to explore available options to avoid a situation where your vehicle is repossessed.
“Repossessing a vehicle is the very last thing a lender wants to do. So, they often have schemes in place to help customers who might not be able to meet their financial obligations. It might be possible, for instance, to get your loan restructured to lower your monthly instalment or reduce your interest rate,” says Gaoaketse.
At a point where all the options have been exhausted, there’s also the option of downsizing to a more affordable vehicle, which would result in a lower monthly instalment.
“The very last thing anyone should do is to simply stop making the required payments, based on ill-conceived advice from people who are not registered financial advisors,” says Gaoaketse. “Such action can be viewed as a deliberate payment boycott and might lead to the lender exercising the legal remedies available to them, including blacklisting the individual with the credit bureaus, and initiating action to repossess the vehicle.”
