Crunch hits car buyers

2009-04-03 00:00

THE credit crunch has hit home for local motorists and new vehicle dealerships and even historically credit-worthy individuals on the hunt for new vehicles have been turned down by banks and financiers.

This is the word from several Pietermaritzburg dealer-principals, who spoke with Weekend Witness about local credit tightening. One said the combined KZN midlands market in 2008 was down 26% year on year, compared with the national market’s slump of only 21,1%.

“Clearly the midlands market in overall terms performed poorly,” he said.

Local dealer-principals agree that access to credit is the main stumbling block facing local consumers and dealerships.

Dealer-principal of Datcentre Pietermaritzburg, Matthew Holmes, said approval ratios of the banks are down to as low as 13%, from a high of about 70%.

He estimates that as many as half of local credit-worthy individuals who would ordinarily receive loans are now being turned down at their first attempt.

Dealer-principal of Barloworld Armstrong Pietermaritzburg, Ward Huxtable, confirmed that even credit-worthy individuals are struggling to secure finance.

“When the credit crunch started, one major financier shut their books,” commented a local dealer-principal.

Huxtable and Holmes said there is still significant demand in the local market.

Holmes added that many of these loans are eventually granted.

However, in some instances, financiers are only willing to conduct the deal at a higher interest rate and with hefty deposits.

Holmes also said financiers have changed their criteria, including the minimum basic gross salary required.

In addition, some financiers no longer consider overtime and other income streams as part of an applicant’s total income.

Marcel de Klerk, chief executive of Absa’s vehicle and asset finance division, was quoted this week as saying that an estimated 6 000- to- 7 000 vehicles are being repossessed every month in South Africa.

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