Durban - Buying a new car is an exciting moment in one’s life and most buyers tend to overlook the fine print in their haste to get into the driver’s seat.
However, take a moment to go through the paperwork and you might just find out you are being charged unnecessarily.
I recently purchased a vehicle and upon inspection I came across an “on the road” and “pre-delivery inspection fee”.
I questioned these fees with the salesperson. After being persistent that I was not going to pay these fees, he relented.
The “on the road fee” is charged by the dealership for making the necessary adjustments to make the vehicle ready to drive off.
This sometimes means changing the factory setting on the vehicle.
Are these fees legitimate? Certainly not, according to the National Credit Regulator (NCR).
These fees can can be as much as R8000, depending on the model and make of the car.
Hence, over a period of say five years given to pay off your car loan, whether through the bank or the dealerships in-house finance method, you end up paying much more than the original amount charged on the invoice for “on the road fees”.
I called the offices of the NCR to get their views on the matter. The NCR’s Katherine Germishuis was clear about these fees.
“The act regulates the fees and charges that can be charged on a credit agreement in sections 100, 101 and 102.
“Basically, it covers a closed list of fees and charges. The ‘on the road fee’ is not on the list. The act does not allow for any other fee or charge to be reflected in a credit agreement irrespective of the nature of the fee or charge.
Germishuis is therefore of the view the “on the road” fee charged in BMW credit agreements should be refunded.
BMW have now opposed the Compliance Notice by referring it to the National Consumer Tribunal to adjudicate on.
Edward Makwana from BMW’s Communications Division released a statement, which read: “BMW Financial Services (South Africa) (Pty) Ltd (‘BMW Financial Services’) received a Compliance Notice from the National Credit Regulator on 4 October 2017.
BMW Financial Services disagrees with and disputes the contents of the notice issued by the Regulator and will be objecting to the notice.
The ‘on the road fee’ is a fee agreed to between the dealer and the consumer. We will give further comment when the time is right.”
With regards to Volkswagen Financial Services South Africa (Pty) Ltd, it is charging consumers an “on the road fee”, admin fee and handling fee on credit agreements.
These fees are not permitted to be charged on credit agreements by the National Credit Act.
The Compliance Notice instructs Volkswagen Financial Services South Africa (Pty) Ltd to refund consumers and submit an audit report to the NCR. Repeated attempts to get a response from VW SA proved fruitless.
The National Credit Act allows consumers to be given a quotation which sets out the cost of credit before signing credit agreements.
Consumers should request this quotation from their credit providers so that they can properly check the cost of credit that is being offered.
These fees, ideally, should not be charged, BUT the NCR cannot adjudicate on matters pertaining to car dealerships.
They can, however, address same with finance providers like banks, or in some cases, in-house finance providers.
The Regulator has already issued compliance notices to two dealerships, namely VW Finance and BMW Finance and you can bet that the vehicle finance divisions of other dealerships will follow soon.
Does the National Credit Act allow for the charging of these fees? The Regulator is quite adamant that the NCA does not allow for this.
With the excitement of a new vehicle purchase, one can easily overlook certain charges on an invoice.
It’s not just the “on the road fee” that I question. I often questioned the “pre-delivery inspection” charge.
Remember, you are already being charged a hefty sum for a brand new or second hand vehicle.
Why should the buyer pay for additional and perhaps unnecessary charges?
For example, a new vehicle costs R350000 as a list price; you should be paying that plus perhaps licence and registration as well as for number plates.
Most dealerships fill in a fair amount of petrol/ fuel at no cost, extended warranty, some might charge for branded rubber floor mats and will even give you, at their cost, a bottle of bubbly and a floral arrangement, if the purchaser is a lady.
Of course, if you desire additional extras that becomes part of the vehicle, then you would pay for these. Anything over and above that is questionable.
If you are paying cash for the purchase, then the so-called “on the road fees” falls away and should not be charged at all as the deal is not subject to the National Credit Act and this is what the Regulator has taken issue with with VW SA and BMW SA and they have been requested to refund these charges to the buyers.
If you have bought a vehicle recently, check that invoice.
If you have been charged “on the road fees”, then you have every right to write to the National Credit Regulator via e-mail: [email protected], attaching the invoice and credit agreement in question.
Have you “souped-up” your set of wheels lately? Do you own an exotic or a vintage model vehicle?
E-mail your details to me and I will feature same in future articles. Happy motoring!
* Naresh Maharaj is a radio news and sports editor/ presenter, freelance motoring journalist, MC, international sports correspondent and voice-over artist. E-mail: [email protected]; Twitter: @nmaharaj321
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