To enjoy long-term vehicle ownership, avoid repossession

To enjoy long-term vehicle ownership, avoid repossession

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The country’s transport system is plagued by many challenges; hence, owning a vehicle is a necessity for many people. Many people believe that owning a car is a good way to get a loan with better terms in addition to being a means of transportation.

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The National Credit Regulator’s (NCR) latest Q1 2024 Consumer Credit Market Report reveals that vehicles represent the most common form of collateral for borrowers in SA, comprising 49.32% of all secured credit agreements. Conversely, owners often utilise other forms of collateral, such as furniture and durable goods, which constitute 46.35% of secured credit agreements. Additionally, insurance policies account for 1.41%, while retirement benefits make up 1.07%.

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While a vehicle is often seen as a depreciating asset, the long-term advantages of owning a fully paid-off car are clear, as highlighted in the NCR’s latest Consumer Credit Market Report. Therefore, consumers must manage their finances responsibly, especially during tough times, to prevent the risk of vehicle repossession.

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It is therefore important to maintain a good credit history and credit score when facing financial difficulties. This can be done by restructuring your spending habits by cutting down on unnecessary non-essentials and prioritising the basics. When faced with a tough financial situation, always consult your vehicle finance provider immediately to explore available options to avoid a situation where your vehicle is repossessed, as this is the last thing a lender wants to do. That said, they have schemes in place to assist clients who find it hard to meet their financial obligations. If need be, they may also consider restructuring your loan to lower the monthly repayments or reduce your interest rate. If any of these don’t materialise, there is also the option of downsizing to a more affordable car, as this will consequently lower your monthly instalment. 

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It’s essential to continue making payments and avoid following advice from unqualified sources. Stopping payments can be seen as deliberate non-payment, leading to legal actions like blacklisting and vehicle repossession. It’s important to always consult registered financial advisors to avoid such problems from occurring.

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