If you have had a financial hiccup and you have arrears on your car, what are your rights?

We’re sure that most people have missed car payments at some stage, but when your car is in arrears, this is when it gets a bit more serious.

When this happens, the bank will start to send you letters, and the collections department will phone to know when they are going to get paid.

What will happen when you are behind on your car payments?

Imagine this: you are 2 months in arrears on your car payments and all of a sudden you get a phone call from a collections agency or the bank themselves and the person on the other side of the line tells you that you must either catch up the arrears by Friday or you must give back your car.

What are your legal rights in this situation?

The first and most important thing to remember is that you do not have to give your car to anyone except the Sheriff when there is a court order to collect your car. Remember, the Sherrif must to show you that court order.

But…

If there is no court order yet and all you've received is a phone call, you have three options you can consider:

1. If there has been a mistake and the bank hasn’t picked up your payment, or something like that, then refuse to give them your car, but get the problem sorted out as soon as possible.
2. If it’s not a mistake at the bank, but you have enough money coming through in the next few weeks to catch up the arrears on your car, then you can refuse to give up your car, and catch up the arrears as soon as possible to ensure no further problems.
3. This is the most serious option. If you are 2 months in arrears (for example) and you are not going to be able to catch up, there are 2 things that you can do. If you want to keep your car and you are earning money every month, go see a debt counsellor. The advantage of seeing a debt counsellor in your area is that you don’t have to catch up the arrears, and you can pay less than your instalment and keep your car. But, you still have to pay every month after that, otherwise, you can still lose the car. The second thing is if you are not going to be able to afford the car anymore for whatever reason, and the best option is to give it back.

Don't forget to get quotes when your car payment is in arrears!

If you are planning to give back your car and they have phoned you to ask when they can collect the car, take it to a few places that buy cars. You can get quotes from places like we buy cars and get three quotes for someone to buy your car and get them in writing. Then contact the bank and tell them what quotes you have and do they want to take the car, or will they allow you to sell it at a higher price.

If the bank then takes the car they cannot sell it for less than the quotes that you got (because when they take the car they put it on an auction and they sell it for what they can get), you don’t want to be the one that gets the lowest price because you are protected by the quotes that you got.

The sad part is, if you owe R200 000 on your car and they sell it for R120 000, then you still owe them R80 000 for a car you don’t have, so if you can save R20 000 or R30 000 by getting three quotes beforehand it was a day well spent riding around getting quotes.

So if you are in an arrears situation with your car, remember that you don’t have to give your car to anyone except the Sheriff. And if you want to keep your car but can’t afford the arrears, then speak to a debt counsellor.

If you need debt assistance or a free debt review, contact RD Debt Counselling on 011 421 2918.