Warning to people with second-hand cars in South Africa

Fraudulent changes of ownership could create a major headache for South African motorists purchasing a second-hand vehicle.

The Sunday Times reports that Johannesburg businessman Joe dos Santos recently had his 2020 Maserati GranCabrio repossessed by Standard Bank, as the previous owner still owed roughly R4 million in finance payments for the vehicle.

Dos Santos had checked to ensure that the vehicle he purchased for R1.3 million was legitimate. Unbeknownst to him, the previous owner’s bank clearance letter stating that the car was fully paid up was forged.

However, Dos Santos isn’t backing down without a fight. His initial urgent court application was struck off the roll as the judge determined that the matter lacked urgency.

“We applied for a new date on the normal roll but haven’t received it yet,” he added.

Dos Santos said similar vehicles are frequently priced at around R1 million, so the R1.3-million price tag was not suspicious.

He purchased the vehicle from a dealer’s agent for Luxurious Sport Auto, which had taken it over from Pretoria-based Drive Nation dealers.

The latter had bought the Maserati from Muhammad Osman Mansoor, who denies forging the bank clearance letter.

Standard Bank spokesperson Ross Linstrom confirmed that the bank had taken possession of the vehicle and advised that Dos Santos approach the broker or dealership from which he purchased the car for legal recourse.

South African banks can repossess a vehicle when the owner or finance holder fails to make payments on their loan agreement.

While this can typically happen after a few missed payments, banks can start the process after just one missed payment.

Vehicle repossessions on the decline in South Africa

Experian’s Consumer Default Index (CDI) for the fourth quarter of 2024 shows that vehicle repossessions are likely on the decline in South Africa, with the sum of first-time default balances declining by 13% year-on-year.

The index tracks the marginal default rate for home, vehicle, personal, and retail loans, as well as credit card accounts.

This involves the sum of first-time default balances, or accounts that have never previously defaulted, as a percentage of the total sum of balances outstanding.

“The CDI is published quarterly with a two-month lag, including a balance-weighted composite index and five product-specific sub-indices,” said Experian.

The specific indices are grouped as follows:

• Home loans, vehicle loans, and credit cards. The traditionally banked market segments typically hold these products, and,
• Personal and retail loans. These are usually used to enter the credit market.

According to Experian’s data, the CDI for vehicle loans declined from 3.97 in December 2023 to 3.47 in December 2024 — a 13% decline.

The average outstanding balance for vehicle loans between October and December 2024 was roughly R521 billion, while new default balances for the period stood at R4.5 billion.

The chart below shows the marginal default rate for home, vehicle, personal, and retail loans, as well as credit card accounts from January 2020 to December 2024, provided by Experian.