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A Randburg car dealer might be flouting the law by disregarding the provisions of the National Credit Agreement Act - or might have found a loophole to evade them.
Instead of giving clients a pre-agreement disclosure or assessing them to establish if clients are able to repay a debt, P&D Auto Investment, which also trades as InspectaCar, dupes buyers into signing a cash agreement to evade the act's provisions.
The act compels service providers to give a quotation, which is usually subject to provisos and conditions, affording consumers the opportunity to consider the intended transaction and possibility of seeking similar service elsewhere.
Signing cash agreements allows InspectaCar to penalise clients who later fail to secure finance though there is no clause that says so in their offer to purchase.
Thomas Nethengwe of Soshanguve is battling to recover the deposit of R20 000 he paid to P&D Investment & Leisure in Randburg, north of Johannesburg.
Nethengwe said he wanted to buy an Audi for R157 535. He paid the deposit in August. He said the sales executive, Mervin Pather, promised to help him secure finance but his credit record did not allow it.
"Plan B was to get a loan from my employer but I couldn't because he relies on government tenders," Nethengwe said.
Two months later his contract of employment was terminated. He notified the seller of his predicament and asked to be refunded. The dealer agreed to repay only R12000 after collecting a penalty fee of R8000.
Pather later told Nethengwe he was not entitled to a refund because he had raised their expectation and the company could not bear the loss.
Piet Jansen, who introduced himself as the owner, said Nethengwe entered into a cash agreement with them.
"It was a cash deal," he said. "He had to get funds from his employer to buy the car for cash. In fact, we did not have the car he wanted and had to buy one from another car dealer."
He said they were not contravening the the act.
Asked whether they were P&D Auto Investment & Leisure or InspectaCar, Jansen said: "This is only a courtesy call and not for you to ask questions I cannot answer."
The offices of the national credit regulator will investigate whether InspectaCar has violated the act's provisions.
The offices of consumer affairs have agreed to probe the alleged unfair business practice against InspectaCar, aka P&D Investment & Leisure.