In the current economic climate, not being able to keep up with debt payments is becoming an ever-increasing reality. Knowing your rights regarding car repossession will put you in a more powerful position, in terms of knowing how to avoid it, and also what to do if faced with repossession.
The National Credit Act sets out standard conditions for a vehicle instalment sale agreement. Provision of credit is based on the condition that the borrower pays back the capital plus interest. It is also based on the provision that should a borrower default on his payments, the credit provider is entitled to cancel the agreement and repossess and sell the vehicle in order to recover the outstanding balance owed to them. (www.legalcity.net)
“Credit providers of cars are known to be more aggressive in collecting arrears than property credit providers.” (www.carrepossesion.co.za).
This means that in the case of not being able to make a car repayment, it is crucial to alert the creditor immediately, and to find out the options available to you. Normally, once you alert the creditor, they will provide you with an opportunity to make the payment, usually by providing an extension. Should you still not be able to make the payment, the creditor will then take legal action to repossess your car.
There is also the option of “voluntary repossession”, whereby the seller takes back the car without the buyer or seller having to go to court (this necessitates an express agreement between the buyer and seller to this effect). A significant benefit to the buyer here is that this option does not attract a judgement to his name, which can last for 5 – 10 years. The seller also benefits, as he simply takes back the vehicle and auctions it off to recover the capital still owed on it. (www.carrepossesion.co.za).
Knowing your rights regarding car repossession requires you to understand the various steps in a regular repossession process. An attorney is legally unable to repossess a vehicle without a court order. A written warning also needs to be issued to the consumer.
The process follows this structure:
- 1st letter is issued, giving the consumer 30 days to pay arrears
- Is the consumer is unable to pay in 30 days, a 2nd letter is issued, giving the consumer an additional 14 days
- If no payment is made after this, the attorney gets a court order to repossess the car
- The consumer then receives a summons, and goes to court to defend his case
- Should it be determined in court that he cannot pay his arrears, the judgement to repossess is then made
- The court or attorney will then be responsible for repossessing the vehicle
- The vehicle will then be sold by the creditor, usually on auction, with the “voetstoets” condition attached
While it is difficult to get a vehicle back once it has been repossessed, if you make “full financial restitution on any money that is owed” (www.lisabank.co.za), it is possible to get the vehicle back, provided it has not yet been sold.
Financing a vehicle can feel like a daunting undertaking, especially if you are unsure as to whether you can keep up with your payments. If you are confident that your payments fit conformably within your budget, there is no reason why you would ever run into trouble in this area. However, it is worth knowing your rights regarding car repossession nonetheless, as circumstances can quickly change, and it pays to be prepared for any eventuality.