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Avoid Your Car Getting Repossessed With These Simple Tips

vuyi on March 28, 2023

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:

  1. 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.

Challenges and opportunities for recovering new vehicle sales in SA – May 2021

vuyi on June 1, 2021

As the country adapts to adjusted Level 2 lockdown regulations, the impact of the pandemic remains high on the motor industry’s agenda.

A year ago, retailers were resuming sales under Alert Level 4 and the market mustered 12,874 sales during May 2020. One year later and the picture remains subdued, albeit with more stability as the market recovery continues to gain some momentum.

The market continues its slow recovery in the face of several challenges and opportunities

– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank

According to naamsa, the Automotive Business Council, the new vehicle market sold 38,337 units during May this year. While unfair to compare this against May 2020 (up 197.8%), it is noteworthy that this represents a 7.6% growth over last month’s sales.

“The market continues its slow recovery in the face of several challenges and opportunities,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank. “Interest rates remain at historical lows, providing some of the most affordable finance and consequently opportunities to purchase a new vehicle. However, price inflation against the backdrop of a subdued economy continues to be a barrier for many purchase decisions.”

Compared to a year ago, new vehicle finance agreements through our books are averaging a deal size of R356,313, up 11,2%

– LEBOGANG GAOAKETSE, HEAD OF MARKETING AND COMMUNICATION AT WESBANK

According to the latest Vehicle Pricing Index (VPI) released by TransUnion in May, new vehicle prices in South Africa rose at nearly three times the general inflation rate during the first quarter of 2021. “

When measured against WesBank’s average deal size, we can see a similar trend in the amount of finance to access these vehicle purchases,” says Gaoaketse. “Compared to a year ago, new vehicle finance agreements through our books are averaging a deal size of R356,313, up 11,2%, while pre-owned deals average R253,537, an increase of 10,6%.”

Demand for vehicle finance continues to be reassuring, however. “Attractive deals on the showroom floor and a growing need for replacement as that cycle increased over lockdown are contributing towards the market’s recovery,” says Gaoaketse.

While May’s sales growth over April is welcomed, it should be noted that April sales were down on March figures

Supporting this demand, the passenger car segment sold 24,122 units during May, 85,1% of which were retailed through dealers to consumers. Dealer channel sales remain relatively robust and are 41,7% ahead year-to-date, for which retailers will be grateful. This segment was 7,1% ahead of April sales.

The Light Commercial Vehicles (LCVs) segment sold 11,930 units during May, 10% more than in April, improving the segment’s position significantly. Year-to-date sales in the segment are 68,5% higher than for the same period last year. Dealer channel sales in the segment accounted for 91,4% of sales.

“While May’s sales growth over April is welcomed, it should be noted that April sales were down on March figures,” says Gaoaketse. “This is indicative of the market’s slow recovery, but reassuring, nonetheless. As the industry prepares for the implementation of the Guidelines for Competition in the South African Automotive Aftermarket on 01 July, the motor industry has many opportunities to continue its significant contribution to the South African economy.”

Five Tips To Success When Applying For Your Car Loan

vuyi on May 11, 2021

In the current economic climate, with increased living costs and the stresses of everyday life in lockdown, many consumers are fearful of being turned down when applying for credit.

Whether it’s a house, credit card or a new vehicle, banks are bound by law, through the National Credit Act (NCA), to ensure that consumers can afford the financial commitments into which they enter. While credit should never be used to live beyond one’s means, it can be a necessity – as in the case with financing a car, which is a major financial commitment.

“While there’s no guarantee that a customer’s application will be approved, there are best practices to follow that can improve one’s credit health and greatly increase the chances of being granted credit,” says Lebogang Gaoaketse, WesBank Head of Marketing and Communication.

1. Establish your affordability

The first step in calculating your budget is finding out how much you can afford to spend on a car. To do this, simply take your income (after taxes and deductions) and subtract all your monthly expenses such as food, rent, airtime, subscriptions, insurance and the like. All these costs need to be deducted from your total income to arrive at your disposable income. This is the money that can be used for luxuries, savings or essential credit, such as monthly car instalments.

Carrying out this budget exercise at home gives you a clear picture of how much you can spend on car instalments.

2. These extras aren’t optional

Remember that affording a car isn’t just about settling the monthly instalment. If you have calculated that you have R5 000 to spend on a vehicle after paying all other monthly expenses, you will need to use that amount to cover the instalment as well as other essentials. Fuel and comprehensive insurance cover are examples of ongoing monthly expenses that need to be budgeted for. If your vehicle doesn’t have a service or maintenance plan, you should also consider putting some money aside each month to cover regular maintenance costs.

These items form part of the overall cost of vehicle ownership and should be included in your budget when submitting your finance application. If your budget allows for these costs, you improve your chances of your application being approved for a car loan.WesBank advises allocating between a half and two thirds of your budget to the vehicle instalment, with the remainder allocated to the additional costs. For example, if you only have R5 000 a month to spend on a car, between R2 500 and R3 000 should be used for the instalment repayment, with the remainder going towards fuel, insurance and maintenance costs.

3. Save up for a deposit

If you’ve demonstrated to the bank that you can budget responsibly, you’ll impress them further if you can put down a deposit payment. While it’s not absolutely necessary to pay a deposit, doing so will work in your favour in the long-term. Paying a deposit reduces the amount of credit required for the transaction, which means lower monthly repayments, less interest and improved affordability. Your ability to afford the monthly repayments is one of the biggest drivers when banks assess your finance application.

Financial responsibility also reflects well on your credit profile, which will also go some way to ensuring your finance application will be approved.

4. Settle as many debts as possible

Your credit profile or credit history shows banks how you use credit. This includes clothing accounts, overdrafts, home loans, personal loans and credit cards. As long as you make your monthly payments on these accounts, your credit profile will be spotless and banks will view you as a reliable borrower.

According to the NCA there are two main types of credit agreements. The first is a credit transaction such as a personal loan, which is taken out and paid off, with interest, over a certain period. With each payment, the outstanding balance reduces over the agreed loan period.

The second type of credit agreement is a credit facility such as an overdraft or a credit card. These are revolving facilities with a maximum amount but also require a monthly repayment of an agreed amount.

When applying for credit, the bank takes all your current and available credit into account. For example, if you have a personal loan that you have been paying off for two years, with a balance of R15 000 and instalments of R1 000, these figures are used in assessing your affordability.

If you have credit facilities such as a credit card with a limit of R50 000 and an overdraft with a limit of R25 000, these amounts are also included in the assessment – whether they are fully used or have a zero balance. These facilities remain in place even after your vehicle finance has been approved and if you do use them then your monthly affordability has to include their repayments. For this reason, the NCA requires the bank to take all credit facilities into account.

The best advice here is to have as little debt as possible, which frees up money in your monthly budget. Once you’ve paid off an account, it is a good idea to close it – or lower the total limit for the facility. The fewer credit facilities you have in your name, the better it looks for your credit profile and your future finance applications.

5. Trading in for the best deal in town

Once you’ve completed the budgeting exercise and calculated what you could afford in a vehicle, you’re ready to visit a reputable, WesBank-approved dealership. One other thing to consider if you own a vehicle is trading in your existing car. If you’ve had your current car for more than four years, chances are that its trade-in value will be more than the money you still owe the bank. This means you’ve passed the breakeven point for your vehicle loan. It also means that the money you make from trading in your car can be used as a deposit towards your new vehicle purchase. The same is true if your car is paid off: the money you receive from that trade-in deal can be put down as a substantial deposit on the cost of your new car.

If your vehicle’s trade-in value is less than the amount you owe the bank, it means you have not yet reached the trade-in value. In this scenario, you will either have to keep your existing vehicle for another couple of months, or you could use some of your savings to assist in settling the existing vehicle loan – though that is not ideal.

Of course, having a trade-in where you don’t have to pay in additional money is going to greatly benefit your car loan application.

“The last thing to keep in mind is to be patient and shop around for the best deal. The new vehicle market is very competitive and, with the current low interest rates, manufacturers have some very attractive offers – some that could help you afford a car and others that offer better value. Find a deal that suits your budget and your needs, and use the advice provided to assist you with your next finance application. If you’ve carefully considered your expenses, calculations and affordability range, your application for finance should be approved,” says Gaoaketse.

A look at vehicle sales figures one year since lockdown began.

vuyi on April 6, 2021

As the country observed the first-year anniversary since lockdown commenced, new vehicle sales provided reason for the industry to celebrate.

Twelve months ago, the country reeled to news of the pending lockdown as showrooms prepared to close their doors, consumers headed home, and vehicles were only let out for essential services. In March 2020, the new vehicle market plummeted 29.7% compared to March 2019 to record just 33,545 sales. The grip on the South African motor industry had tightened quickly.

One year later, the resilient industry is fighting a hard recovery. But March 2021 sales put one of their best feet forward.

According to naamsa, the Automotive Business Council, March sales recorded 44,217 new vehicle sales. Compared to March last year, this represents a 31.8% increase in sales year-on-year, although the downtrodden March 2020 performance should be critically considered.

With interest rates remaining stable at their low levels, a constantly – albeit slowly – improving supply of imported vehicles, and a slightly healthier economy operating within eased levels of restrictions, we expect the market to continue recovering well.

– Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance

“Reassuringly, March sales show a 18.4% increase over February this year, a number more indicative of the real strength of the market,” says Lebogang Gaoaketse, Head of Marketing and Communication at WesBank Vehicle and Asset Finance. “With many of the brands indicating difficulty securing sufficient stock to meet demand, the new vehicle market seems to be well on its way to recovery.”

Passenger car sales were up 23.4% to 27,330 units year-on-year and 13.2% up on February 2021. With some renewed activity in the rental market, the consumer demand was noticeable with dealer sales in the segment up 24.2%.

Light Commercial Vehicles (LCVs) delivered a staggering 52.4% improvement over March last year to sell 14,375 units. This performance means the LCV segment is up 13.2% year-to-date and hopefully represents a surge in business confidence. The majority of activity in the segment remained on the showroom floor with dealers selling 61.1% more bakkies than they did a year ago.

“With interest rates remaining stable at their low levels, a constantly – albeit slowly – improving supply of imported vehicles, and a slightly healthier economy operating within eased levels of restrictions, we expect the market to continue recovering well,” says Gaoaketse. “While we have seen a significant increase in the average deal size financed by WesBank, we don’t expect new vehicle prices to increase dramatically. This will also provide added stimulus to the market and is a positive sign of consumer sentiment and ability to participate in the new vehicle market.”

The strong March performance made an encouraging impact on year-to-date sales. First quarter sales are just 0.9% down on the same period last year with 116,225 sales recorded during the first three months.