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NCR Loses SCA Appeal

The National Credit Regulator (NCR) has lost the latest round in its campaign against “on the road” fees.

After years of legal battles, the Supreme Court of Appeal (SCA) confirmed that these costs (often added by dealerships to the price of a car) are not illegal charges by credit providers.

Instead, the court said they form part of the total price of the vehicle, which the finance company may simply agree to fund.

How It All Began

Back in 2017, the NCR originally issued compliance notices against several car finance providers, including Volkswagen Financial Services, BMW Financial Services, and Mercedes-Benz Financial Services.

The regulator argued that by allowing On The Road fees (OTR) to be financed, these companies were effectively charging consumers unlawful fees which are not expressly permitted under the National Credit Act (NCA).

The case first went to the National Consumer Tribunal (NCT). Here, the outcomes differed. In the case of BMW and Mercedes-Benz, the Tribunal found that the finance companies had not themselves charged OTR fees and that it was the dealerships that added them. For Volkswagen, however, the Tribunal took a stricter view and adjusted the compliance notice to say they had contravened the Act.

So, there was now some uncertainty.

AS a result, the matter was escalated to the High Court.

The High Court Battle

Unhappy with the mixed results, the NCR appealed to the High Court.

 The vehicle finance credit providers also lodged their own appeals and the High Court sided with the credit providers.

Its reasoning was straightforward: OTR costs like licensing, registration, number plates, or delivery charges are not charges imposed by the finance houses. They are costs that arise during the sale of the vehicle and are set by the dealer and the buyer.

The finance companies are not inventing new charges. They are only lending money to cover whatever amount the buyer and dealer agreed as the purchase price.

This ruling set the stage for the NCR’s final attempt at the Supreme Court of Appeal (SCA).

The SCA Ruling

At the SCA, the NCR argued again that OTR fees are not among the narrow list of fees allowed under the NCA, and therefore cannot legally be included in a credit agreement.

The SCA disagreed.

The court drew a clear line between (1) fees charged by a credit provider and (2) costs that form part of the total purchase price.

According to the SCA, if a dealership adds OTR costs and the consumer accepts them, those amounts become part of the price of the car. The finance company then simply finances that amount, it does not “charge” the fee in the legal sense.

The SCA stressed that a credit agreement is about deferring payment of a total price. If the total price already includes OTR costs, then what is being financed is simply a larger purchase price, not a disguised or unlawful fee by the lender.

A Loss For the NCR But Win For Consumers

While the court found in favour of the finance companies, it also recognised that consumers could be disadvantaged if OTR fees are bundled into the financed amount without proper disclosure.

A few thousand rand added upfront for things like licensing or delivery can grow into a much bigger cost once interest is applied over five or six years. In one example, a R100 fee could end up costing the consumer over R700 if paid back over time.

To address this, the SCA has now ordered stricter disclosure requirements on these credit providers and the dealerships:

    • Breakdown of OTR fees – contracts must show each component separately, such as licence, registration, plates, or delivery.
    • Consumer choice – buyers must be given the option to pay OTR costs upfront in cash or to finance them.
    • True cost shown – if OTR fees are financed, agreements must explain how much more consumers will pay once interest is included.

The NCR’s long legal fight has ended in defeat. The SCA has made it clear that OTR fees are not illegal when they are part of the purchase price set by a dealership.

But for future car buyers, the ruling has also resulted in better protection by requiring clearer disclosure and a proper choice on how to deal with these extra costs.

If you are buying a car on credit, always check the contract carefully. Know what the OTR items are, and ask your dealer to show you the difference between paying them upfront or financing them. A small saving today could prevent years of paying interest on something as simple as number plates or registration fees.