Guiding consumers since 2009

Cars sacrificed as repo rate bites

By Staff Writer

Local auctioneers are reporting a “marked” increase in the number of repossessed property auctions as the interest rate rises start to bite consumers.

And auctioneer Dennis O’Connor said there were about 50% more repossessed vehicles when viewed against last year’s figures.

South Africa’s largest vehicle financier, Wesbank, reported in April that car repossessions went up to more than 1000 per month for the first quarter of 2008, an increase of 67% from 2007.

According to O’Connor, most of the cars that go under the hammer are entry-level models as opposed to luxury brands, a sign that the lower end of the market was under more pressure from interest rate hikes which render consumers less able to keep up with bond and car payments.

“We’ve definitely seen a big increase in foreclosures in bonds, but not necessarily following through to the sale of the houses,” said O’Connor. “There are a lot of car repossessions; I’d say about 50 percent more than last year.”

Mark Rose-Innes of Rose-Innes & Scheepers Auctioneers said he had also noted an increase in car and house repossessions of around 20% compared to a year ago.

However, Rose-Innes said the number of repossessions vary from the luxury upper end consumer brands to the lower end.

The failure of consumers to keep up with payments has prompted the big four banks to call on customers to renegotiate terms of settlement when faced with financial difficulties culminating from the higher interest rates.

The Reserve Bank has been hiking the repo rate consistently by 50 basis points since June 2006, leading the prime lending rate to rise to the present 15%.

The next interest rate decision will be made by the SA Reserve Bank on Wednesday next week.

East London debt adjusters also confirmed an upsurge in the number of people not being able to meet their debt re-payments.

Debt Relief, a company that focuses on debt collection and litigation, said people were being far more careful with their money in light of the interest hikes.

“Customers are not always innocent victims, however,” said Ian Runchman of Wylde and Runchman Attorneys. “Many intentionally over-extend themselves by purchasing unnecessarily and buying luxurious items on credit or by taking loans rather than reducing their expenditure.”

Some credit granters, he said, made it difficult for customers to understand the terms and conditions related to their debt. Customers should also be aware of their ability to repay their debt, he added. Runchman urged financial institutions to ease the debt burden by reducing administrative charges and interest rates. - By SIYA MITI and LERATO MATSANENG

Recent Articles

Featured New homeowner? Be aware of these extra expenses

You’ve overcome all the hurdles of buying a home. You’ve managed to pay your deposit and your closing payments, and now you’re a proud title deed holder. However, there are other expenses waiting around the corner. Are you prepared?

Your biggest credit conundrums – answered

Understanding your credit health is one of the most important factors in managing your finances. This is because it gives you insight into your debt, your borrowing ability, and your financial history. While many understand this, there are still many questions on how to do just that.

Avoid debt collectors, choose debt counselling

There are two things you can do when you are struggling to pay your debt. You can either let your creditors hand your debt over to debt collectors – or you can let debt counsellors help you deal with your debt.

Retail notes: easy investment option for new investors

Being a newbie in the world of investing can be challenging because you don’t know where and how to invest. With so many investment options, you could easily be befuddled. Justmoney looks at how retail notes can help you cut your teeth in the world of investing.   

Deals

Translux Student Discount

Price: Depends on destination
When: Daily
Where: Nationwide

Zimbali Senior Citizens Discount

Price: From R1342.00
When: Until 14 December 2019
Where: KwaZulu Natal

Free meal for kids at Mozambik Restaurant

Price: Free
When: Until 15 November 2019
Where: Johannesburg, Durban, Pretoria