“If the client has missed three payments and has not brought their situation to our attention, accounting and regulatory standards render that loan as ‘non-performing’ and legal proceedings need to begin,” says Coetzer.
“This starts off by obtaining a court order for repossession of the vehicle. Even in these legal proceedings, once we have the documents allowing us to secure ownership, we try to encourage the client to help us with a ‘voluntary surrender’ and thereby avoid a sheriff visit and asset retrieval process.
“We strongly encourage clients to engage with us as we can explore solutions to assist them. Furthermore, during the process we may encourage clients to consider applying for debt counselling debt relief as prescribed in the National Credit Act if this may assist them to pay off their car or their shortfall.”
MFC’s website gives some information for clients in distress:
Lebogang Gaoaketse, head of marketing and communication at WesBank, says repossession is an act of last resort in the collections process.
“The general rule of thumb is that being behind with three instalments qualifies you for repossession action. Having said that, we have many customers who have accounts that are more than three instalments in arrears where arrangements to pay them off were negotiated and are in place. In other instances, we encounter customers who are up to date, electing to give their assets up due to affordability.”
The communication process is as follows:
Extensive telephonic attempts are made to make contact with the customer. Generally, arrangements are concluded to pay off the arrears depending on the customer’s affordability. WesBank has arrangements in place that extend to even longer than six months;
Should deliberations fail, the last option is repossession by either voluntary surrender or the legal option.
If a customer refuses the voluntary surrender option the bank gets a court order that empowers the sheriff of the court to remove the asset from the customer’s possession.
WesBank has devised payment-relief plans from April 1 to June 30 to assist customers affected by Covid-19, with the type of relief dependent on the type of product each customer holds. The bank has been inundated with requests for assistance, which has led to delays in getting to each customer.
“It is unfortunate that there have been some delays in responding to all of our customers and for that we would like to apologise. Amendments to the system have been made to ensure a quicker turnaround time for responses”, says Ghana Msibi, WesBank Motor CEO.
In response to the Covid-19 pandemic, Absa recently launched a payment relief programme that gives 85% of its customers the opportunity to either continue paying their instalments, if they are in a position to do so, or to defer payments for a period of three months.
Faisal Mkhize, managing executive: Absa Vehicle and Asset Finance (AVAF) says the bank has the ability to craft personalised credit solutions for customers in financial difficulty, which is based on each customer’s unique needs and in line with the rules set out in the National Credit Act.
“All our contracts allow customers who are up to date to have a one-month payment holiday upon request. Thereafter, we have multiple short- and long-term plans available to assist customers in need. We urge all customers to reach out to us proactively when they run into financial difficulty. We can then assess the situation and propose an appropriate solution,” he says.