Johannesburg - The “new car from R699pm” car scandal shows no signs of abating, as the focus turns to the possibility that many consumers’ financial details were altered in order for them to pass the banks’ affordability tests.
Many of the mostly low-income earners claim that they previously applied for car finance in the normal way and were declined, but when they applied to the same banks via Satinsky, supplying the same information, they were approved quickly.
The banks which financed these deals – Nedbank’s MFC, Absa and Standard Bank – insist that they applied the normal assessment criteria and did not take into account the advertising fees which the applicants were to earn from a third party company, Blue Lakes Trading & Promotions, in return for having their new cars plastered with advertising stickers.
In other words, the banks say the affected consumers could afford the full repayment on their cars without the help of any form of subsidy. But in reality, most simply cannot, as evidenced by the financial and emotional trauma they are claiming to be suffering since the gradual decline in those fees since March, and the sudden halt on all payments last week.
Many have exhausted their credit facilities and have been forced to borrow money from friends and relatives to put food on the table.
William Nxaxe, who signed the deal in November 2012, said: ““I depended on the advertising fee to subsidise my premium of R2850 on my Nissan Micra.
“The loss of this money will have a huge impact on my life. I won’t have any money for the family’s groceries.”
Ironically, the “victims” of the fee collapse are now saddled with a much larger instalment than those who bought the same car – mostly entry-level “cheapies” – from a traditional dealer.
They paid no deposits, the interest is relatively high, the loans are all over six years, and the purchase price of the cars was not discounted in any way.
So why did the banks think all these people – said to number 7000 when Satinsky pulled the plug on the advertising fee deal last week – could afford the full monthly instalment when most are adamant they can’t?
The answer, in many cases, is to be found in the numbers on the banks’ credit application forms.
Many have told Consumer Watch that their stated monthly living expenses total on that form is much lower than what they declared to a Satinsky rep at the time of application.
In an extreme case I am investigating, an Eastern Cape policeman with a nett income of R9000 discovered that his bank credit application lists his monthly living expenses – rent, food, petrol, insurance – as a total of just R300.
He’s now saddled with a car repayment of R2400 a month. I am awaiting comment from the bank concerned.
Others have e-mailed Consumer Watch to say that other details on their credit applications are incorrect: employer’s details, length of service, next-of-kin details and even addresses.
Many have approached their banks for help and been given various options – such as halving their instalment for six months – but this is a short-term solution with massive interest implications.
Simon Lapping, a Johannesburg-based consumer activist who administers the Facebook group “I have been done in by ‘Drive a New Car From R699 per month’” – which has 1500 members, growing at a rate of 40 an hour – says he’s seeing a similar trend.
“With one bank, I’ve even seen the next of kin being the same person on the applications of several unrelated people,” he said.
“I think it’s safe to say that there was little to no checking of these details going on.”
Lapping pulls no punches when it comes the banks’ involvement in the Satinsky saga.
“As I see it, it was reckless lending on a mass scale, and the banks now have two options: review all the loans, and in the case of those found to be reckless, give the consumer the right to cancel, be refunded and hand back the car; or let the National Credit Regulator investigate. If found guilty of reckless lending the fines could run into billions.”
Wesbank put out a statement last week, saying it had decided not to participate in the deal when approached a few years ago, because it had doubts about the sustainability of the business model and wanted to protect consumers.
But Lapping believes the bank ought to have done more at the time.
“If Wesbank really wanted to be honourable, they should have shared their misgivings with the authorities.”
For its part, Satinsky is now urging its clients to sign up for a new deal – Accelerator Rewards – as a means of earning cash and discounts for cars sold as a result of their smartphone referrals.
WHAT TO DO
If you’ve been left in the lurch by the demise of the Blue Lakes advertising deal, ask your financing bank for a copy of your credit application, and don’t take no for an answer. Then take a good look at the income and expenditure on the application. If the numbers don’t correspond with what you disclosed at the time of the application, write an affidavit regarding the whole application process and what you stated at the time. These are grounds for opening a case of fraud.