R699 Cars – Reckless Lending?

DRIVE A NEW CAR FOR R699

You may have seen them on the road: Cars with decals on the back saying that you too could drive a car for only R699 (or something similar). Over 200 000 consumers signed up and drove cars under the R699 deal with  Satinsky 128 before it all fell apart. In the wake of the collapse of the scheme many of those consumers faced having to pay the full installment for their cars and found themselves unable to do so. This lead to the banks beginning to exercise their normal collections processes and in many cases wanting to take the cars, sell them on auction and making the consumers pay the shortfall on the sale amount.

Consumers get help

Several of the R699 consumers however entered debt review and got assistance from professional Debt Counsellors who looked at the accounts and considered if the consumers could have properly afforded the credit at the time they received it. They also looked at whether the paper work was properly done and if the consumers understood the consequences of the credit agreements. This is called a reckless credit investigation.  After information began to come to light about how the paperwork on these deals was done several of these matters have been taken to court and have indeed been found to be reckless.

More Reckless matters to come?

In two recent matters (in the Western and Eastern Cape) ABSA and Nedbank have lost battles at court trying to say that everything was done correctly in regard to granting the credit. Apparently the courts were not satisfied with the paperwork and felt that the data captured in relation to the applications was not accurate. While there is an obligation on consumers (or companies like Satinsky 128) to provide information, the onus actually lies on creditors to validate the info and check many other factors when granting credit.

ABSA have said they have R700 Million tied up in these matters. Debt Counsellors try to make arrangements with creditors so that they can get their funds back but in a more manageable manner for consumers. With so many matters involved it might be wise for the banks involved to start making arrangements for consumers rather than simply following their old collections methods which leave them exposed to reckless lending allegations and investigations. Any court hearing a matter about a credit account can ask for an investigation.