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Have you been blacklisted and are struggling to get financing? Here is how you can get financed

By Faeza
03 March 2017

HAVE you recently applied for vehicle finance to help you buy a new car and been told that your application was unsuccessful because you have been blacklisted? A similar thing could have happened if you tried to get a cellphone contract, open an account at a retail store or asked a bank for a new credit card or a home loan. What does it mean to be blacklisted and are there any ways in which you can access credit even if you are blacklisted?

HAVE I BEEN BLACKLISTED?

You might convince yourself to believe that nobody noticed that you have failed to make your last three monthly loan payments. But they have! In fact, by now they’ve probably sent you several letters urging you to pay the outstanding amount. Ignoring these warnings has its consequences. One of them is that the company to which you owe money will enter a listing of your failure to honour your debt on your credit profile.

MANAGING YOUR PAYMENTS

Your personal credit profile is maintained by companies called credit bureaus and contains the details of your financial history, including how often you have applied for loans and credit in the past and how you’ve been managing your monthly payments.

Failure to pay money that you owe listed on your credit profile is also referred to as being blacklisted. Both individuals and companies can be blacklisted and millions of South Africans are currently afflicted in this way.

Credit history

Companies and banks can have you blacklisted for not settling your store account, credit card debt or loan payments in good time. If you’ve had a court judgement against you in a financial matter, that will also be listed. Such listings may remain on your record for between three and 10 years, even if you manage to clear up all of your debts. So a poor credit history can affect your chances of buying anything on credit for a long time. Having your credit profile cleared of listings can be extremely difficult and it’s definitely advisable not to acquire a bad credit rating in the first place. You can do this by always making your monthly payments on time, living within your means, not taking on debt you can’t afford and checking your credit profile regularly. You’re legally permitted to request one free copy of your credit report from a credit bureau per year. In order to clean up a bad credit

profile, you’ll have to pay any outstanding amounts to all of your creditors or arrange for new payment schedules that suit your income. Only then may they be willing to have

your listings removed.

CAN I GET FINANCE EVEN IF I’M BLACKLISTED?

The problem with being blacklisted is that you will find it very difficult or even impossible to convince any registered financial institution to lend you any money. If you apply with them for credit, they will check your credit profile, notice that you have been blacklisted

and are most likely to turn down your application because they consider you to be too risky a client. Blacklisted people may even struggle to open a bank account or get a job. There are, however, some companies who are willing to deal with blacklisted individuals and if you really need credit – for example to buy a new car – you may want to approach them. Companies who are prepared to do business with blacklisted people sometimes refer

to the practice as “non-standard finance” and most of them will require you to come up with a percentage of the money you need yourself. For example, they may require you to provide R15 000 in cash before they agree to lend you the remaining money you’ll need to buy a new car. They will also only give you credit up to a certain maximum amount and

you’ll be restricted to the type of car you can buy.

PAYING OFF

In most cases you’ll be asked to complete an application form and provide copies of your driver’s licence, ID, proof of residence, bank statements and salary slips. Because it is fairly risky for nonstandard finance lenders to provide credit to blacklisted people, the deals they offer may include a number of rather difficult conditions. Before you sign your name to any contract, you need to be absolutely sure that you understand exactly what you are letting yourself in for. As with normal credit financing you will, of course, have to make

regular monthly payments to settle your debt. Making these payments on time and paying off the total amount as quickly as possible can actually help in cleaning up your credit profile. Chances are that you will be able to secure non-standard financing if you own some property or something of value that you can put up against the sum of money you are borrowing. Be very cautious though!

LEGAL RIGHT

If you default on your payments, your creditor has the legal right to take possession of this property and sell it to recover the outstanding amount. If things go wrong, you may end up not only penniless, but homeless, too. In addition to companies that specialise in car finance for blacklisted people, there are others that may be willing to help you clean up your credit profile by extending you a loan that will allow you to settle all of you outstanding debts in order for the listings to be removed. They may furthermore agree to give you a cash loan or provide you with a cellphone contract. To get the best deal, compare the offerings as many different companies as possible, read all of the small print very carefully and perhaps even ask a lawyer or a particularly knowledgeable and trusted friend for advice before you enter into any agreements.