We have all hopefully heard of the National Credit Act (NCA)? One often hears people talking about HP’s implying that buying a vehicle on “credit” would be on an HP agreement. This is somewhat out of date as the HP Act was replaced by The Credit Agreements Act (+/- March 1982) and this has now again been “updated and replaced by the National Credit Act. Simply stated; this Act is specifically designed TO PROTECT the customer should credit facilities be availed of. This act (NCA) governs the vehicle financing process.
But what does this mean to the man in the street that has decided to buy a new vehicle? The motoring consumers out there can now experience increased affordability and more security in their vehicle finance agreements under the new National Credit Act.
This Act came into effect on 01 June 2007, and has replaced the previous Credit Agreements Act and the Usury Act. The main objective or purpose of the Act is for the promotion and advancement of the social economic welfare of all South Africans by:
Who does the Act apply to?
The NCA applies to all credit agreements and this includes the following:
Like in most laws there are limitations and exclusions pertaining to amount of the loan or possible use of the asset being financed but these will be explained or discussed at point of sale by one of our registered and qualified Representatives all of whom are registered with the Financial Services Board.
Must I still pay a deposit under the NCA?
One must immediately be careful here to differentiate between the NCA implications and Bank Policy. The NCA has done away with minimum deposits – there is no longer the legal requirement of a 10% or 20% deposit BUT this does not mean that everyone will be able to enter into a credit agreement without a deposit. All finance applications are subject to a bank credit assessment and the structure of the contract will depend on the consumers risk profile. In other words, the Bank may well approve the transaction but on condition that you pay a deposit i.e. they do not want a 100% exposure or possibly they feel you are only good for 80% of the loan re affordability. Yes, this could be negotiated but the point is that the Bank have the final say re “size” of the advance.
What documentation is required when applying for finance?
Where should I apply for vehicle financing at the Dealership?
Every Dealership in the Eastern Cape Motors Group has a dedicated and duly authorized Business Manager (Representative) as required by the National Credit Act and the FAIS and FICA. The Business Manger will be able to assist you with your new vehicle finance application and any questions that you might have regarding the purchase of your new vehicle. They will submit your application to the Finance House of your choice and negotiate you the best possible deal.