24/04/2018 14:19 SAST | Updated 24/04/2018 14:20 SAST

Before Your Car Gets Repossessed, Here Are Your Options

"It isn’t often that there isn’t a solution," says a financial expert.

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None of us ever want to find ourselves in a financial situation where we can't pay our monthly vehicle instalments, but with the rising cost of living, made worse by petrol-price hikes, the recent VAT increase and other unforeseen expenses, this can happen — putting our cars at risk of being repossessed by the credit provider.

Not paying your instalments is a breach of contract...

"It is vital for you to be aware that not paying your instalments is a breach of contract and may eventually lead to the repossession of your vehicle, so it is important to make sure that you find a way to avoid this before it happens," said Charl Potgieter, head of personal markets at Absa.

If, however, you do find yourself in a financial position affecting your monthly car obligations, there are a few options, said Potgieter – and a number of them do not involve parting with your four-wheeled friend.

1. Speak to a financial adviser at the bank through which your car is financed

This should be your first action, because banks have experts on hand to best advise you on exactly what options are open to you. This will depend on the vehicle finance plan and additional products and services you have selected.

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2. Depending on your circumstances, there may be value-added-products that provide relief

Most banks offer additional products and services such as credit protection that help protect your vehicle finance agreement and minimise potential risks you face. Credit protection typically covers eventualities such as death, permanent and temporary disability, dread disease and retrenchment — depending on what option you have selected.

If you have a value-added product or service in place, your adviser will be able to help you understand what it covers and what options are available to you.

It isn't often that there isn't a solution, especially if you collaborate with the people that deal with these matters on a daily basis.

3. Refinance your vehicle.

If the settlement value of your vehicle is higher than the trade-in or market value, then your next step is generally to consider extending the payment period of your loan. You can talk to your bank about restructuring your loan to make your monthly obligations more manageable.

4. Trade your car in for a more affordable vehicle, or sell it

You can go to a reputable dealer to establish the trade-in value or negotiate the sale of your vehicle. This will help you determine what other vehicle is a more realistic option in your price range, or else provide a much-needed cash injection to ease financial pressure.

  • Alternatively, you can also look at the option of selling your vehicle through your bank. Some banks have a private-to-private network, in which the bank facilitates the deal through its own bank-approved partners and can arrange finance for the buyer if they need it.
  • You can also sell your vehicle privately through online platforms, auctioneers and others — however, this comes with considerably higher risks, particularly of fraud in the event that your account is not paid up. Remember that you will still be held liable for vehicle instalments until the vehicle is no longer in your name.

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"It isn't often that there isn't a solution, especially if you collaborate with the people that deal with these matters on a daily basis. Industry leaders like your bank will work with you to come to an arrangement that will help you survive tough times," said Potgieter.