You’ll pay off your car loan and that’s that. But we all know that’s easier said than done, especially during these uncertain times. That’s why we share seven great tips to smartly assess your current situation, evaluate all available options and to act fast to avoid repossession.
According to Experian’s Q1 Consumer Default Index or CDI for 2021, 23.7 million consumers – with credit cards, personal loans, car loans, home loans and retail loans – have a total of R1.9 trillion in outstanding debt. The index shows that while home loans and retail loans have shown an improvement, car loans have deteriorated by a substantial margin, from 3.67 per cent in March 2020 to 4.10 per cent in March 2021.
‘Reports by TransUnion and National Debt Advisors have echoed these findings and despite the lockdown relief measures put in place by banks to assist cash-strapped borrowers, car repossessions are rising,’ says Marc Friedman, CEO of Weelee.co.za.
‘Covid-19’s third wave is putting South Africans under even more pressure. To avoid a repossession, cash-strapped vehicle owners need to react promptly and be wise in weighing up the various options available to them.
‘If you think that you might struggle with fulfilling your car instalment obligations, be proactive and start making a plan now.’
Weelee.co.za provides the following tips for car owners to survive these turbulent times:
- All cards on the table: Compile a detailed budget with an accurate reflection of your income and expenses. Be realistic about whether you can afford your car’s repayments, running costs, maintenance costs and insurance.
- As lean as possible: In addition to trimming items on your household budget, try to make your current car more affordable. Examples include shopping around for a good RMI accredited provider to service your car professionally, but more affordably, with OEM parts; buying more affordable, but still good quality tyres; and making sure you use all benefits offered by your maintenance plan and other value-added services.
- Consider all plans: If you are in good standing with your financial services provider (FSP), try to negotiate different terms, such as extending your loan duration to reduce repayments. This may incur more interest, but you’ll be able to keep your car. If you’ve been retrenched, consider using your credit insurance or income protection plan, if you have one, to carry you through times of crisis.
- Sell it now, buy something better later: Sell your car and scale down to alleviate the financial pressure, saving any surplus for a future deposit or using it to settle other debts.
- Don’t accept the first offer: Be savvy when selling your prized possession. Research the going rate for your car properly. Don’t simply settle for the first offer and make sure you get maximum cash for your wheels.
- Consolidate multi-car households: Consider letting go of one or multiple cars to either scale down on the number of vehicles or to buy something more suited to your financial and lifestyle needs.
- Be vigilant: There are many criminals, who often pose as buyers, ready to pounce on unsuspecting sellers. Only use screened, trusted dealers and properly secured platforms.
