‘Remember, the bank is legal owner of your financed car’ - Customers rush to Ombud as car repossessions spiral
As South Africa experiences a spike in car repossessions by banks amid economic hardships, the Ombudsman for Banking Services said it has observed a major increase in customers crying foul over the transaction to finance the car, or how the vehicle was repossessed.
Reana Steyn, the Ombudsman for Banking Services said at times customers feel that the banks have tracking devices on the financed vehicles - after representatives of banking institutions confront the defaulting motorists at places, including shopping malls.
“The starting point is to always remember, and not many consumers know this, that the bank remains the legal owner of that property that you financed,” Steyn spoke to broadcaster Newzroom Afrika on Tuesday morning.
“Even though you drive it around, and you probably have driven it for years - it does not become your property, it remains the property of the bank until you have made the final payment,” she said.
“That is the principle number one. If it is their property, they can always come and repossess it. But there is a process to follow, and a legal process.”
She said before repossessing a vehicle from a defaulting customer who skipped monthly instalments, banks will make phone calls and send emails to try and make rearrangements with the client.
“That is their first prize. They do not want to take the vehicle back, they want their money,” she said.
The ombud highlighted that many customers “really run away” by not taking the bank’s phone calls and ignore the many emails from the financial institutions.
During the process of trying to collect its money, Steyn said the bank may send its representative to the physical address of the customer. However, the motorist is not obliged to hand over the vehicle to the bank, according to Steyn.
“That person may ask you to hand over the vehicle, the property of the bank, because you have not been paying. Consumers need to remember that they don’t have to do that, at that point. They can, if they want to - if they want to try and get rid of the problem by trying to resolve it this way,” said Steyn.
“Customers do not have to be forced to do that. That is very important. If you do not go that route, then the bank will issue a summons, they will list you on the (credit) bureau, they will issue summons and only when the sheriff comes to your house with a court order - you absolutely have to hand over that vehicle.”
Earlier this month, IOL reported that more than 22,000 South Africans had their vehicles repossessed in the first six months of the year, according to data from the National Credit Regulator (NCR).
Vehicle repossessions are becoming a common occurrence as maintaining a cost of living, compounded by rising interest rates and high unemployment rates, becomes an almost impossible task for many citizens.
The NCR data recorded the number of vehicle repossessions in the first two quarters of the year, measuring the periods from January to March and then from April to June.
The vehicles that were repossessed were purchased through a bank loan or by non-bank vehicle financiers.
Non-bank vehicle finance refers to any instance when a buyer wants to purchase a vehicle that falls outside a bank's criteria in terms of the car’s age.
For example, if a bank finances vehicle purchases up until the car is 72-months-old, and you want to buy a car that is 10-years-old, an outside institution will have to fund you.
According to the NCR data, 10,931 vehicles were repossessed between January and March.
Between April and June, 11,682 vehicles were repossessed.
This represented an increase year-on-year, as 10,835 vehicles were repossessed in Q1 2022 and 10,634 in Q2 2022.
The second quarter of 2023 also saw more vehicle repossessions than the second quarter of 2021, when 12,408 vehicles were repossessed between April to June 2021.
IOL