More than 22,000 South Africans had their vehicles repossessed in the first six months of the year, as the cost of living becomes excessively expensive due to rising interest rates and inflation.
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 citizens.
This was also noted by the Banking Services Ombud Reana Steyn, who said her office has experienced an increase in the number of complaints regarding vehicle repossessions.
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.
Steyn said it was important during a time like this that the rights of consumers and financial institutions are highlighted to avoid grievances.
If a vehicle is purchased through finance, then the owner of that vehicle is the financier until the last payment is made.
“With financed vehicles, the bank, as the titleholder, remains the legal owner of the vehicle, and ownership only passes to the buyer on payment of the last instalment to the bank,” Steyn said.
Independent Media spoke to a source at a global car dealership who said that consumers are protected against any form of coercion when it comes to repossessions.
“I know that there are a number of avenues a bank will explore before they actually repossess a vehicle. There’s debt restructuring and all of that. But as far as repossessions go, sometimes you can be bullied into giving your car over if you are behind on payments,” the source said.
“But if you know that you can make them (payments) again, then there are ways to protect yourself, guided by the Consumer Protection Act. So repossessions are not a quick process and consumers can protect themselves in times like this.”
South Africans are also turning to credit cards more often to cover daily expenses, based on data from the Experian Consumer Default Index (CDI).
But this has not worked out in their favour, as 6.49 million consumers are at least three months and longer in arrears, according to the NCR.
Just over 17 million credit users, out of over 27 million, are in good standing credit.