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Car Repossession in South Africa can be the most devastating and depressing thing that can happen to anyone. This often happens when you cannot pay or afford to pay the originally agreed installment with the creditor.
This article will provide you with highly valuable tips that will help you when you are facing this predicament as well as answer the most frequently asked and highly searched questions regarding car repossession in South Africa.
Car Repossession in South Africa
The first tip is to understand that if you have fallen behind on your car repayments, the company that financed the purchase of your vehicle is legally entitled to take it back. However, a strict legal process needs to be followed before a creditor can successfully repossess your vehicle.
The process for repossession of a vehicle is very complex, you need to be careful if a debt collector or representative from the bank comes to you requesting for you to sign forms that allow them to take possession of the vehicle.
This is not a legal process, and should you sign, you will consent to the voluntary surrender of the vehicle which you do not have to agree to. Vehicle repossession can only take place via an official and original court order, named a warrant of execution.
You would also firstly have had to have been served with a legal document called a summons which gives you a chance to defend yourself. These documents would have been delivered to you by a sheriff of the court.
The Legal Process of Car Repossession in South Africa
- According to The National Credit Act, any creditor can send you a Section 129 letter of demand if your account is in arrears for 20 days or more.
- Creditors are allowed to proceed with the legal process of the collection after one missed payment.
- The process that needs to be followed when a vehicle is repossessed is in terms of the Section 123 letter of demand.
The notice basically gives you three options. You must:
- Bring your payments up to date; or
- Engage a debt counsellor; or
- If you’ve stopped paying due to a dispute with your creditor, refer the matter to an alternative dispute resolution agent, consumer court, or an ombud with jurisdiction.
You have only 10 days, from the date of delivery, to act on the notice. If you fail to do so, your creditor may hand over your account to a debt collector, which will result in you paying debt collection fees on top of everything else that you owe.
Or your creditor may apply to the courts for a default judgment against you, which will be noted on your credit report for five years and have a negative impact on your chances of obtaining more credit or getting credit at a good rate.
Your credit provider must be able to prove that a section 129 notice was delivered to you. This is in terms of a 2012 landmark judgment handed down by the Constitutional Court, which states that the purpose of the notice is to give you “a last chance before court enforcement procedures drop the guillotine” on you.
Before this judgment, it was enough for a credit provider to show it had sent a notice to your address. But since the judgment, if you never received the notice, you can contest legal action on the basis that the notice didn’t reach you and you were therefore unaware of your rights.
A section 129 notice must also be dated and refer to the agreement in which you are in default and the default amount.
Your creditors can show they complied with section 129 of the NCA by proving that the notice was sent by registered mail, reached the correct post office, and can produce the track and trace report from the post office or proof of actual delivery.
So, don’t try to escape your legal responsibility if you’ve received the notice. Act on it.
- Should you not respond to the letter of demand, the creditor may proceed to institute further legal action commencing with summons and request for judgment where after the court will issue a warrant of execution authorizing the repossession of your vehicle.
- After the vehicle has been repossessed the bank will send the vehicle to an auctioneer. The auctioneer will be authorized to sell the vehicle on behalf of the bank. However, the auctioneer must store the vehicle for a period of ten days, to give you a chance to gather the arrear funds or conclude a repayment arrangement with the bank. If you fail to do so the vehicle will be sold. (Please note that often vehicles sold on auctions get sold for less than the amount that you owe to the bank and once the vehicle is sold you will still be held liable to settle the shortfall amount).
Frequently Asked Questions About Car Repossession in South Africa
What happens when your car is repossessed?
The credit provider (bank) will send the vehicle to an auctioneer. The auctioneer will be authorized to sell the vehicle on behalf of the bank. However, the auctioneer must store the vehicle for a period of ten days, to give you a chance to gather the arrear funds or conclude a repayment arrangement with the bank. If you fail to do so the vehicle will be sold.
How long before a car is repossessed in South Africa?
Creditors are allowed to proceed with the legal process of the vehicle collection after one missed payment or you have failed to comply with Section 129 letter of demand and your account is in arrears for 20 days or more.
Do you still owe the creditor after a repossession?
If your car or other property is repossessed, you might still owe the creditor shortfall on the contract. (Please note that often vehicles sold on auctions get sold for less than the amount that you owe to the bank and once the vehicle is sold you will still be held liable to settle the shortfall amount).
How can I stop my car from being repossessed?
You have only 10 days, from the date of delivery of the Section 129 letter of demand, to act on the notice. Our advice is to contact us and apply for help.
We will help protect your valuable asset from repossession.
Apply for Debt Counselling Here
How to avoid car repossession in South Africa?
- Speak to your credit provider – a proactive approach may be the best way to avoid repossession. Try to negotiate an alternative arrangement, such as selling your vehicle yourself or surrendering it.
- Settle the outstanding amount – This is the ideal option. However, you may find yourself in this very situation because you can’t afford your payments. If you are able to settle the outstanding amount, do so to avoid repossession.
- Reinstate the loan – Ask your credit provider if you can reinstate the loan. This way, your missed payments will be integrated into the settlement value. Keep in mind that you may pay more on interest fees in the long run.
- Apply for debt review – If you’re struggling to make ends meet, debt review may be the best solution for you. Debt Review is a legal process introduced by the National Credit Act to prevent consumers from being blacklisted and having to deal with the consequences thereof.
If you apply for debt review and your application is successful, a National Credit Regulator (NCR) registered debt counsellor will assist you with:
- Restructuring your debt so you only pay one affordable monthly debt repayment
- Communication with your credit providers
- Negotiating with credit providers for reduced payments
- Legal protection against repossession and creditor harassment.
Debt review protects you from losing your valuable assets, such as your car, provided you apply before it’s too late. As soon as you apply for Debt Review at The National Debt Review Center, your creditors are notified that you are under debt review within 5 days. They must, by law, communicate with us and stop all communication with you.
Who to speak to when your car is about to be repossessed or you have received a Section 129 letter of demand?
Send us a WhatsApp on 0727703674 to speak to an NCR registered debt counsellor.
Angela · October 7, 2022 at 6:27 am
My car is bn repossessed 2018 and i want to know,what happened after auction.
How much was it sold for?
Kagiso · October 18, 2022 at 10:05 pm
Did you sign anything before it was repossessed?
Ishmael · December 13, 2022 at 9:19 pm
The company don’t respond to my request of reducing monthly installment and extension of contract,but what they do they send repo team to come and repossessed the vehicle.Is that fair?Which cost me to be indebted on the other hand because I’ve to borrow money from people I know so I cannot loose the car.What must I do?I’ve made a request from 2021 till due no fair respond from them
The National Debt Review Center · January 11, 2023 at 10:32 am
Contact us on 0410125036
Johan Smith · April 3, 2023 at 6:51 am
What is my legal right to repossess a vehicle that is on my name,but used and paid for by a family member
The National Debt Review Center · April 12, 2023 at 11:44 am
Please see our response below regarding this question.
Johan Smith · April 3, 2023 at 7:00 am
What rights do I have to repossess a vehicle on my name that is still under finance agreement from a family member that fails to pay the installment
The National Debt Review Center · April 12, 2023 at 11:42 am
Unfortunately the car is in your name and you are deemed liable for it. Find ways to get your family member to pay you back or seek legal advice. This is very unfortunate and tend to happen to family members or couples.
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