Illegal charges still being added to vehicle finance contracts

When the National Credit Regulator announced recently that it was unlawful for an “on-the-road fee” to be included in vehicle finance contracts‚ and ordered BMW Finance and VW Financial Services to stop doing so and refund those who’d been charged it‚ motorists across the land rejoiced and looked forward to a refund of that fee.

But it appears to be business as usual at dealerships across the land‚ with extras such as a pre-delivery checks‚ valets and admin fees continuing to be added to finance agreements‚ while both BMW and VW have objected to the so-called compliance notices served on them.

“(We) will continue to conduct industry-wide investigations .. to root out illegal charges and fees that consumers are charged‚” the regulator said in October‚ urging consumers to refuse to have such extras loaded on to their finance agreements.

But the various banks’ representatives - many of them based in dealerships - are still adding the “forbidden” fee to the contract; usually between R4‚000 and R5‚000 on cars with a purchase price of under R200‚ 000 and more for the higher end cars.

Finance agreements may include an initiation fee‚ an extended warranty‚ the cost of delivery - if the buyer doesn’t collect the car themselves - plus a tank of fuel and licence or registration fees‚ provided those costs aren’t padded‚ the regulator says.

But the National Credit Act doesn’t allow for the other extras which have for years made up that “on the road” fee.

When Michelle Reinhard asked a dealership for a quote on a Suzuki Swift last month‚ it featured an on-the-road fee of R3‚250‚ which included a licensing and registration fee of R1‚000.

“I said I would pay the licensing fee in cash and asked for a breakdown of the rest‚” she said. That breakdown included checking the car (R1‚600)‚ a transaction fee to cover “administration involved‚ phone calls‚ expenses” (R1‚000‚ excluding VAT)‚ car mats (R730)‚ number plate holders (R150) “service pouch with service books and owner’s manual” (R450) and a R70 key ring.

“Why am I being charged for the car to be checked before sale‚ for a service book and manual and a number plate holder which is part of the car?” she asked.

“I am extremely annoyed at this blatant exploitation of a consumer.”

Asked to comment‚ an NCR spokesman said: “We cannot comment on the specific examples in your email since the merits of our compliance notices are now before National Consumer Tribunal for adjudication.”

Sahil Mohunlal‚ who purchased a 2016 VW Polo from an Umhlanga dealership in July‚ paying R7‚000 on-the-road fee‚ tried to get it refunded after reading that the on-the-road fee should not be added to a finance agreement.

But he got nowhere with the dealership or the financing bank.

“Everyone is giving me the run around‚ and no one is showing interest‚” he said.

VW Financial Services’ standard response is: “(We) hold a different few on the legal interpretation of the applicable provisions on the National Credit Act. (We) are in the process of lodging an objection and will request that the National Consumer Tribunal reviews the compliance notice.”

Two weeks ago‚ Kugen Naidoo was told by a Joburg dealership that there was a R6‚000 “admin on the road fee” to be paid on the R290‚000 Audi he wanted to buy for his daughter‚ on top of a R2‚600 licence and registration fee. Asked to break it down‚ a manager in the “pre-owned” department listed a valet‚ mechanical check‚ and “transferring of full maintenance plan”.

When Naidoo asked why he should have to pay for such “transfer”‚ he was told: “We have different departments that charge us.”

The regulator’s advice stands: “Consumers currently buying cars must read their quotations carefully and refuse to enter into a contract which includes prohibited charges.”

If the fee was added to your credit agreement‚ with whatever bank‚ the Credit Regulator wants to hear from you - email complaints@ncr.org.za. Attach your credit agreement as evidence.