Repossessing a customer’s car is the very last step a finance house wants to take. The bank would far rather have the customer keep the vehicle than to have to take it away due to missed or non-payments.
In an economic downturn such as the one South Africa is currently facing, where household budgets are stretched to the limit, consumers really feel the financial pressure. Unsurprisingly, this type of pressure could lead to some unsound decisions such as missing a monthly repayment on a vehicle or loan agreement. Such a decision could have consequences that may result in the bank potentially repossessing your car.
“We understand the true value of a vehicle and how it can represent so much more than a mode of transport to so many people, it is a means to mobility and as such, having one’s car repossessed is a traumatic experience,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank.
Should you find yourself in a financially compromising situation, being honest and engaging in an open dialogue with your financial lender are by far the best policies. Consumers are encouraged to contact the bank as a matter of priority to explore the options available to restructure their payments as a starting point.
“Customers who can’t meet their vehicle repayment obligations due to financial challenges are encouraged to contact the bank as soon as possible to discuss potential alternative payment arrangements. Defaults on payments will always result in a consultation between the bank and the customer,” Gaoaketse explains.
“This will also negatively impact your credit status. Credit bureaus are notified if you cannot make a payment. If legal action has been taken against you, this will affect your credit score when applying for future credit.”
Here are some useful tips for consumers to avoid having their vehicle repossessed:
- Make payments on time
The best way to avoid having your vehicle repossessed is to make all of your payments on time. Set up automatic payments or reminders to ensure that you don’t miss any payments.
- Communicate with your lender
If you’re having trouble making payments, it’s important to communicate with your lender. The aim is to find a solution that works for both you and the bank as the primary objective is to ensure that you maintain possession of your vehicle.
- Prioritise your payments
If you’re struggling to make payments on all of your bills, it’s important to prioritise your payments. Pay your essential bills first, such as rent, utilities, and car repayments.
- Refinance your loan
Refinancing your loan may be another option to investigate, depending on your situation. This could help lower your monthly payments or get a lower interest rate.
- Sell or ‘downgrade’ your vehicle
If you’re unable to make payments and have explored all the financial options open to you, you could consider selling or downsizing your vehicle. This will avoid having the vehicle repossessed and enable you to pay off the outstanding loan amount.
“It is important for customers to understand that creditors will only repossess a vehicle as a last resort if no other payment arrangement can be made. We always investigate and discuss all options available to our customers so they can make the repayments. It really is in everyone’s favour, at the end of the day, to keep the car in the customer’s garage, rather than on our auction floor,” concludes Gaoaketse.