How to deal with vehicle finance repayment challenges

In a new instalment of our Street Smart series, brought to you by Absa Vehicle and Asset Finance, Jacob Moshokoa explains what you can do if you find yourself in a financial slump and battling to make your monthly vehicle finance repayments.

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For us South Africans, car finance is an essential service and after our houses, probably our biggest expense. That said, South Africa’s economy has been facing some challenges, which has caused many of us to tread carefully when making big financial commitments, like buying a house or a car.

If you fall behind on your vehicle finance repayments, take action as soon as possible.

One of the challenges we face is: What happens if we can’t make our vehicle loan repayments? You don’t want to find yourself in a situation where you are struggling to make ends meet, you’re thinking about selling some of your valuables and your stress level is rising like the pile of those loan re-payment statement letters you keep avoiding.

Being in a financial slump can be quite scary, but this is the time to face your problem head-on and not resort to ignoring it. Meaning, GET PROACTIVE! So, how do you do that?

Call your bank about vehicle finance repayments

Firstly, call the bank. You can ask for lower vehicle finance repayments (for some breathing room), to put money in arrears back into the loan amount or even extend the repayment term so that your instalments are smaller. Banks like Absa are run by people who get the landscape of our economy and how one can fall on hard times, so call and state your case so they can try and work out a solution for you.

Secondly, sell the car. If you are an Absa Vehicle and Asset Finance customer and find yourself in financial distress, the bank can help you register your car on its FASTBuy platform, which gives you access to over 400 dealers looking to buy cars. You can start this process by sending an email to FASTBuyHUS@absa.africa and an Absa agent will call you to kick-start this process.

Another option is voluntary surrender, meaning considering giving the car back to the bank. Giving your car back to the bank may feel like a defeat or loss, but remember that in the long run, it may be a smart move because downgrading can save your credit record and it’s less embarrassing than a sheriff repossessing it.

A retreat is not the same as a defeat

Just keep this famous quote (apparently made by a military general many, many years ago) in mind: “You’re not retreating, but merely advancing to a more tactically advantageous position.”

Now that wasn’t so scary was it? Remember, if your car is not fully paid off, the bank owns it. And these options only work if you follow the advice well ahead of when the problem arises.

There are ways to make vehicle finance repayments even when you're battling financially.

In a more positive light, banks will always do their very best to assist you in resolving the issue since they genuinely care about their customers’ financial security. By ignoring repayment notices, you’ll only end up wasting your money on additional legal fees and, honestly, you may end up without a car.

Buying a car need not be a fear-based decision, but you need to assess your finances and weigh up the pros and cons. When looking at buying that luxury SUV that you’ve always dreamt about owning, ask yourself: “Do I really need an SUV, when maybe an affordable little budget or compact car will do?”

The goal with all financial decisions should be to keep a clean sheet. Always protect your credit score by paying your accounts on time and putting your hard-earned money towards paying off your loans, act responsibly now and enjoy your car without having vehicle finance repayments keeping you up at night.

For extra information on how you can become a better consumer, keep a lookout for more episodes from our Street Smart series and be sure to visit the Absa blog.