How not to fall for the ‘Blacklisted vehicle finance’ scheme

By Mxolisi Mhlongo

With vehicle prices ever on the increase and tough economic times facing many consumers, it is very tempting to search for ‘easier’ ways of purchasing a new vehicle. All with the aim of bypassing a credit provider. Our advice is simple and firm: Do not do it. While these “easy” purchase agreements look and appear to be fair and square, they are quite often not, and will end with you either buying a vehicle illegally or with a great loss of money.

Recently, we were made aware of a case of a lady in Fourways– we will call her Thuli, who purchased a premium SUV through a dealership without involving a registered, reputable motor vehicle credit provider. Her credit record was unclean, which made it impossible for her to get the required finance above board without clearing her name first. After some negotiations, the dealership in question allowed Thuli to purchase her vehicle of choice by asking her to pay:

A R100 000 deposit to the dealership
A monthly installment payment of nearly R15 000

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After about two years of this agreement in place, Thuli received the shock of her life. An agent of a reputable local motor vehicle credit provider arrived at her house and repossessed the vehicle, despite the fact that she had been paying for it diligently all this time. When she asked for an explanation, the repossession agent explained that the vehicle had been missing for about two years after it was repossessed from the original buyer – we will name him Mandla, and subsequently sold to her illegally. Unfortunately for Thuli, according to the laws of South Africa, she has no legal recourse whatsoever, because she basically bought a ‘stolen’ vehicle. Therefore, she has lost her deposit of R100 000 and those monthly payments totaling around R360 000. All her money has gone down the drain and she has nothing to show for it.

There are several ways one can avoid what has happened to Thuli. You have to empower yourself and others with some knowledge, starting right here.

Always keep in mind that once you enter into a contract with a financing house or credit provider, that contract is binding. The agreement cannot be changed without the consent of the other party.

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You cannot pass on or transfer the contract to a third party without the written consent of the credit provider. We cannot stress this enough. This means if you applied for vehicle finance, were approved, bought a motor vehicle and are currently paying for it, you cannot simply get another person to pay your monthly installments without permission from your credit provider.

Remember that while you are the one who went and ‘bought’ the vehicle, in the eyes of the law it remains the possession of the credit provider up until it is fully paid off. As people often say “the bank owns it”. Therefore, the credit provider can take physical possession of it at any time before that, should you be in breach of your agreement with them. This is called repossession.

A vehicle that has not been fully paid off, cannot be sold to anyone else. Therefore, you, the buyer, cannot transfer ownership to any third party until you have settled all outstanding monies with the credit provider. By extension, nobody else besides the credit provider can sell this vehicle either.

Should a third party – a friend, relative, colleague etc. – be interested in buying the vehicle and then ‘taking over’ your monthly installments, contact your credit provider. They will then subject this third party to a new credit application process. Only with the credit provider’s express written consent can the third party take possession of the vehicle and begin to pay for it.

If anyone claiming to represent your credit provider approaches you with the intention of repossessing your vehicle, confirm this first with their dealer principal. No unauthorised repossession can take place until such proof has been provided.

Following a repossession, ensure that you again contact the credit provider to confirm that the vehicle is indeed, now in their possession.

Written by: Zuko