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Buying a Car? Beware

Many people who go buy cars find that there are a few additional costs snuck into their bill when they make their purchase. These are often called “on the road” fees.

Sometimes this can add up to around an extra R8000 or so.

What is interesting is that if you finance your car you may see that this amount is part of the overall balance you will be paying off over time and the financing credit provider will charge interest on the amount.

This worries the National Credit Regulator (NCR) and many consumers because the National Credit Act (NCA) and regulations does not list this as one of the fees that can be charged for credit.

This is why the NCR sent compliance notices to several motor finances and took the matter to the National Consumer Tribunal. The NCT agreed with them but the matter then moved to the High Courts on appeal.

In a recent ruling, the Pretoria High Court ruled in favour of the car dealerships and credit providers who add these fees into the consumer’s monthly debt repayment plan.

The core of the ruling is that while the NCA does set out some officially allowed types of fees it does not specifically mention such fees nor does it prevent the consumer and seller (car dealerships) from adding in other agreed upon fees. If the consumer requests an amount is added then the credit provider can go ahead and add interest to that amount.

‘The agreement is between the seller and buyer and the banks just finance the agreed amount’

The agreement is between the seller and buyer and the banks just finance the agreed amount. Just because the banks then have a surety and register the vehicle in their name, they were not the ones who decide on the amount that would be financed or what fees were involved.

So, for the future “on the road” fees are back in play.

Note: To read the rest of this issue of Debtfree magazine click next/previous