Avoid those dodgy deals on wheels

2011-02-05 14:08

Buying a car is one of the most ­important decisions you can make but beware of the minefield of dodgy deals out there.

Car financiers advise would-be car owners to conduct business with bank-approved dealerships to minimise the chances of monetary loss and related stress.

Chris Nthite, Absa media relations practitioner for retail banking, says bank-approved dealerships enter into agreements binding them to comply with all relevant legislation.

The risks associated with bad car buying experiences are higher with used vehicle purchases because new vehicles come with guarantees and warranties.

Nthite says some used-car ­dealers simply place vehicles on their floor for customers.

“The vehicle may still have outstanding finance.

“It may not have been properly checked and it may not come with the dealer’s warranty.

“It could also be a cloned vehicle and such vehicles are re-registered back into the used market by ­syndicates,” he says.

Financiers advise consumers to insist on a vehicle’s full service ­history and consider the mileage and what is left of the service or maintenance plan before buying.

Miyelani Shikwambana of ­Nedbank advises consumers to ­ensure that the dealership they buy from is a member of the Retail ­Motor Industry Association or ­Independent Dealer Association.

Both these associations, he says, have strict rules with respect to ­accreditation and membership, codes of conduct and compliance with legislation.

“Some dealerships have joint venture finance arrangements backed by one or more of the major banks,” says Shikwambana.

He says consumers should be careful when considering in-house finance not backed by major banks. The finance and insurance consultant should also be accredited in terms of the National Credit Act (NCA), he says.

He or she should be able to facilitate and assist a consumer with the finance application and insurance requirements.

Consumers should insist on an NCA agent card to be presented ­before they proceed to complete an application form and submit ­relevant documentation.

If the application is approved in terms of the act the consultant must provide a written quote from the bank detailing the amount ­approved, the deposit ­required, the contract term, the ­interest rate and any charges ­payable, says Shikwambana.

“The maximum initiation fee ­allowed by the NCA is R1 140 ­including VAT.

“The maximum monthly service fee is R57 including VAT.

“The total cost of credit over the term of the contract should also be ­included,” says Shikwambana.

Standard Bank advises consumers engaging in private sales to ­obtain a copy of the settlement ­letter from the financial institution that financed the vehicle.

Michelle Marsh, the bank’s ­media relations manager, says the letter should confirm the full and final settlement amount.

It should also have a copy of the vehicle registration documents ­reflecting the seller as the registered owner.

The vehicle should be identified by its engine, chassis and registration number, she says.

An important note is that ownership of the vehicle does not always imply that the owner is the designated driver of the car.

The designated driver should be the one in possession of a driver’s licence.

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