South Africa: Car payment defaults on the increase, tips to avoid repossession

In South Africa, 23.7 million consumers with credit cards, home loans, personal loans, retail loans and car loans, have a total of R1.9 trillion in outstanding debt.

This was revealed by Experian’s Q1 Consumer Default Index (CDI) for 2021.

The index shows that car loans have deteriorated by a substantial margin, from 3.67% in March 2020 to 4.10% in March 2021 while home loans and retail loans have shown an improvement.

Car repossessions in the country, are on the increase despite the lockdown relief measures put in place by banks to assist cash-strapped borrowers.

Vehicle owners who are constrained for cash, need to promptly look for available options to avoid a repossession.

Weelee.co.za provides the following tips for car owners to avoid a repossession:

  • Make a detailed budget with an accurate reflection of your income and expenses. Be realistic about whether you can afford your car’s repayments, running costs, maintenance costs and insurance.
  • Make your current car more affordable. Examples include shopping around for a good RMI accredited provider to service your car professionally, but more affordably, with OEM parts; buying more affordable, but still good quality tyres; and making sure you use all benefits offered by your maintenance plan and other value-added services.
  • Negotiate different terms with your financial services provider, such as extending your loan duration to reduce repayments. This may incur more interest, but you’ll be able to keep your car. If you’ve been retrenched, consider using your credit insurance or income protection plan, if you have one, to carry you through times of crisis.
  • Sell your car and scale down to alleviate the financial pressure, saving any surplus for a future deposit or using it to settle other debts.
  • Before selling your car, research the going rate for your properly . Don’t simply settle for the first offer and make sure you get maximum cash.
  • Reduce the number of vehicles you own or buy a car more suited to your financial and lifestyle needs.
  • Use only trusted car dealers and properly secured platforms to avoid being scammed.

 

Source: Moneyweb