Illegal Vehicle Finance Schemes

Eva Smith (Attorney) @ Lucid Living

If you are in a fix and can’t afford to keep up with your vehicle repayments, speak to a debt counsellor and avoid approaching third-party companies offering to help by taking over payments.
Nicholas Litton, head of risk at WesBank, says there has been a rise in the number of cases, where a business arranges to have the financing of a vehicle taken over by a third party, and is leaving more and more consumers in financial straits.

Usually found in the classified section of newspapers – under headlines such as “Blacklisted?” and “Can’t get finance?” – these  schemes offer to take over vehicle repayments.

“These adverts are directed at those consumers who are experiencing severe financial difficulties and who can no longer keep up with their vehicle repayments, or who are struggling to obtain finance through proper channels.

“The assistance the company provides is finding a ‘buyer’ who will take over the monthly vehicle repayments to the bank. This is an illegal business practice as the financial obligations of a consumer cannot be transferred without the knowledge and agreement of the bank,” says Litton.

He adds that when consumers contact the advertiser they are told that the practice is legal and that they are operating with the permission of the banks.

“This is not true, as no bank will authorise these business practices to operate on their behalf. The client will also be informed that the business practice will pay the arrears on the account or pay a deposit for the vehicle.”

He says the consumer signs an agreement regarding the “take-over” of the asset and the vehicle is then given to the new “buyer”, who is then responsible for paying the monthly vehicle repayments.

“In practice, however, the vehicle repayments are often not made to the bank and the account will be left in arrears, leaving the original owner without a vehicle and still being held responsible for the remaining debt on the account.

“The new buyer who contacts the business practice to purchase a vehicle will be asked to make instalments into a private bank account – which are often not passed on to the bank – or sometimes directly to the bank through manual payments. They are also often required to make a large deposit on the vehicle before it is given to them.

“This private arrangement is illegal and even if the buyer does make the vehicle repayments to the bank, they will not have legally purchased the vehicle. It remains the property of the bank until the account has been paid in full and even then, the buyer does not have the right to retain the asset,” he says.

“It is critical that consumers do not contact such companies as at best they may lose their vehicle. At worst they could be left paying off a huge debt on a car they no longer have.”

Lucid Living has assisted hundreds of “blacklisted” consumers, to lawfully qualify for vehicle and home finance with banks. If you cannot access finance, because you are “blacklisted” or have a poor credit rating, contact Lucid’s experienced credit counsellors (010 590 5617) who will assist you to clear your name and improve your credit worthiness.