Don’t use your car as collateral for a loan
The National Credit Regulator (NCR) has warned consumers against using their cars as security for loans.
“The NCR cautions consumers against using their cars as security for loans or pawning them since they risk losing their cars if they fail to repay the loans, as agreed with credit providers”, said NCR Manager for Investigations and Enforcement, Jacqueline Peters.
The NCR has referred Sun Finance South Africa (Pty) (Ltd) to the National Consumer Tribunal following its investigation, which revealed that terms of the “pawn to drive” agreement entered into by Sun Finance were in contravention of the National Credit Act (NCA).
In May 2017, the National Consumer Tribunal declared the Allied Capital “pawn your car and still drive it” scheme unlawful and prohibited by the National Credit Act 34 of 2005.
“The NCR will continue to investigate pawn brokers who are flouting the provisions of the NCA,” said Peters.
The National Credit Regulator is an agency of the Department of Trade and Industry.