How to Return a Car You Can’t Afford in South Africa

If you find yourself unable to afford your car payments in South Africa, returning the vehicle might be a necessary step. Here’s a detailed guide on how to return a car you can’t afford, supported by practical examples.

To Return a Car You Can’t Afford in South Africa, you should do the following…

1. Assess Your Financial Situation
   • Before deciding to return your car, assess your overall financial situation. Calculate your income, expenses, and debts to determine if there are alternative solutions like refinancing or debt counseling.
2. Contact Your Lender Immediately
   • Once you decide to return the car, contact your lender as soon as possible. Inform them of your financial difficulties and discuss your intention to return the vehicle. Early communication can sometimes lead to better terms or alternative solutions.

Voluntary Surrender Process

1. Initiate the Voluntary Surrender
   • Inform your lender that you want to voluntarily surrender the vehicle. This process is governed by the National Credit Act, which ensures that consumers are treated fairly during credit agreements and debt recovery processes.
2. Arrange for the Return of the Vehicle
   • Coordinate with your lender to schedule the return of the car. The lender will provide instructions on where and how to return the vehicle. Ensure that the car is in good condition to avoid additional charges for damages.
3. Understand the Financial Implications
   • Be aware that returning the car does not absolve you of the remaining debt. The lender will sell the car, and if the sale price does not cover the outstanding loan balance, you will be responsible for the shortfall.
   Example: If you owe R100,000 on the car loan and the car sells for R80,000, you will still owe the lender R20,000.

Repossession vs. Voluntary Surrender

• Repossession: If you fail to make payments and do not communicate with your lender, the car may be repossessed. This involves the lender taking back the car without your consent, often resulting in additional fees and a more significant impact on your credit score.
• Voluntary Surrender: By voluntarily surrendering the vehicle, you demonstrate cooperation, which may result in less severe consequences compared to repossession.

Examples of Major Banks and Their Procedures

1. ABSA Bank
   • Contact ABSA’s vehicle finance department to discuss your situation. They may offer options such as payment holidays or refinancing before proceeding with a voluntary surrender. ABSA will guide you through the surrender process and subsequent sale of the vehicle.
2. Nedbank
   • Nedbank’s MFC (Motor Finance Corporation) division handles vehicle finance. Inform them of your intention to surrender the car. They will provide details on where to return the vehicle and the financial implications involved.
3. Standard Bank
   • Reach out to Standard Bank’s vehicle and asset finance division. They can assist with voluntary surrender procedures and may also offer debt counseling services to help you manage your remaining obligations.
4. First National Bank (FNB)
   • FNB’s WesBank division is responsible for vehicle finance. Contact them to initiate the voluntary surrender. They will instruct you on the return process and inform you of any outstanding balances after the vehicle is sold.

Key Considerations

• Credit Score Impact: Both voluntary surrender and repossession will negatively affect your credit score, making it harder to obtain credit in the future. Voluntary surrender, however, is viewed more favorably than repossession.
• Legal Rights: The National Credit Act protects your rights during this process. Ensure that the lender follows the correct procedures and treats you fairly.
• Seek Legal Advice: If you are unsure about any part of the process, consider seeking legal advice to understand your rights and obligations fully.

Summary

Returning a car you can’t afford is a significant decision that should be made after careful consideration of your financial situation and communication with your lender. By opting for voluntary surrender, you can mitigate some of the negative impacts compared to repossession. Major banks like ABSA, Nedbank, Standard Bank, and FNB have specific procedures to assist you through this process, ensuring you understand the financial implications and your legal rights. Always seek professional advice if needed to navigate this challenging situation effectively.