Remote jamming, balloon payments & faulty products: What you need to know
Consumer journalist Wendy Knowler’s “Watch-outs of the week”
In this weekly segment of bite-sized chunks of useful information, consumer journalist Wendy Knowler summarises news you can use:
Balloon payments can burst your car dream
What can you do if you have your heart set on a car, but you can’t afford the monthly repayment amount, if you finance it over five or six years?
The most sensible thing would be to settle for a less expensive car instead, but what many do is go for the “balloon payment” deal, or finance the car over very long periods — up to eight years.
I’d strongly advise against both those ways of buying a car you can’t afford.
A balloon payment deal lowers your monthly instalment over the repayment period by setting aside a lump sum which you then have to pay at the end of that period, usually six years.
You’re essentially paying off a loan for most of the car, but not all of it. And if you get into financial trouble along the way, selling the car could well leave you in debt.
The so-called ’break-even point” — when the financed car’s trade-in value matches the amount still owed to the bank — is reached a lot later when you factor in a balloon amount.
Florence lost her job last year, and her 5-series BMW was repossessed in August “because of that balloon payment”, she told me.
“I could not pay that big amount so I am now walking everywhere, and I am not fit,” she said. “Please help.”
Sadly there’s nothing I can do to reverse that process for her at this point.
Recently WesBank issued a warning about balloon payments. “While the benefits that come with keeping monthly costs down may be extremely appetising, it is important not to view a balloon deal as a means to purchase a car you simply cannot afford.
“A looming lump sum payment, after years of driving a vehicle, is easy to ignore and forget.
“But settling that debt ultimately remains the responsibility of the buyer.”
And given what’s happened to Florence and many others, I’d add, “whatever your unfortunate circumstances by that time”.
Remote jamming: does your insurer have your covered?
Becoming a victim of remote jamming — where thieves jam the signal from your immobiliser to your car so it doesn’t lock when you press that button — remains a very real threat for South Africans.
In fact, its incidence is increasing, says Christelle Colman of Old Mutual Insure.
It happens mostly in shopping centre parking lots, and usually it’s expensive laptops and sports equipment which get stolen in these cases.
Many insurers still won’t cover thefts when there are “no signs of forced entry”.
“This is a devastating scenario for those who are not adequately insured,” says Colman. “Some assume that they are covered, but then find out when it is too late that their policy doesn’t cover theft during remote jamming.”
The Ombudsman for Short-Term Insurance is likely to side with the insurer if you complained to that body. Its recently released 2020 annual report, included a case study of a man who claimed on his insurance policy for a bag containing travel documents and electronic items which was stolen from his car boot. His insurer rejected the claim because there was no forced entry into the vehicle, even though he produced CCTV footage showing that his bag was indeed stolen from his car’s boot.
OSTI’s adjudicators initially found that the man did not negligently leave the vehicle unlocked, but rather fell victim to remote jamming and that it was thus unfair to deny his claim, regardless of the policy’s Ts and Cs. But when the insurer argued that the video footage did not show that the man had actually locked the vehicle when leaving it and he could therefore not be given the benefit of doubt, OSTI concluded that there was no basis on which to compel the insurer to settle the claim.
So Colman’s advice to car owners to check their policies to find out if they are covered for remote jamming is spot on — some do but most don’t cover it. Because of the increase in incidents of remote jamming, Old Mutual Insure’s policies now cover items stolen from unoccupied motor vehicles, “even if there are no visible signs of forced entry, provided some conditions are met”, Colman said.
The best thing to do is to pay attention when you press that lock button on your remote. Double check to see that your car is locked before you walk away. And park as close to the entrance of the shopping centre as possible as there are always a lot of people and movement in that area.
Can you prove “it was like that”?
“It was like that.” That’s what tenants often say when the landlord or rental agent points out a burn-mark on the carpet or a gouge in a cupboard door when they move out. That’s why such things are noted during an inspection before tenants move in, and the really savvy ones take loads of photos as proof of the condition of the unit at that time. Of course, it’s a really good idea for tenants to take their own photos just before the move in, should they later be accused of causing it. Such proof is key to getting justice.
The same applies when you’re buying goods from a physical store.
If they are given to you wrapped, and underneath all that wrapping the product is damaged, how will you later prove that they sold it to you “like that”?
That’s what happened to Michael of Protea Glen recently. He bought a car bumper from a motor spares outlet to repair his sister’s Polo.
“I took it to the panel beater to have it sprayed and fitted, and I was with them when they unwrapped it — that’s when we saw it was bent on one side.”
Michael returned it to the outlet but was refused a refund or replacement on the grounds that he caused the damage.
After goods change hands, it’s impossible to prove that “it was like that” when sold to you.
The lesson from Michael’s unfortunate experience is to inspect goods before you hand over your money.
The same goes for delivered goods. Don’t be in a hurry to dash inside with your cardboard box — check the goods for visible damage while the courier is on site.
If you find any, take a photo and refuse to accept the delivery.
Some e-retailers may later take your word that the item was delivered damaged, but others will not. Always arm yourself with proof.