The South African Banking Risk Information Centre (Sabric) on Wednesday urged vehicle owners to be wary of a scam that promises to bail out vehicle owners who cannot pay their regular finance installments.
"Banks are concerned about offers made by third parties to vehicle owners promising them solutions to difficulties that they may experience in honoring their vehicle finance repayments. The reality is that most of these offers are scams that result in unsuspecting vehicle owners losing their vehicles whilst still remaining liable for the debt. We urge bank clients who have financed vehicles to first approach their bank before entering into any transactions with third parties regarding their financed vehicles," said Sabric general manager: commercial crime Susan Potgieter.
Sabric said the scam usually begins with advertisements posted by so-called brokers or bogus companies in trade magazines and the classified sections of newspapers promising vehicle owners deals to take over their vehicle installments.
Some of the advertisements even promise vehicle owners a cash settlement that they can use towards a deposit on another vehicle.
Unsuspecting vehicle owners who are often cash strapped, then make contact with the ‘broker’ or bogus company and enter into a deal and the transactions proceeds as promised and the vehicle is handed over to the ‘broker’ or bogus company.
What then happens is that the unsuspecting vehicle owner doesn’t know that the vehicle finance agreement with the bank is not transferred nor settled, and that he is still liable to the bank for the outstanding debt.
Approximately 50 incidents of this nature are reported across the banking industry each month.
"Entering into any third party transactions without the knowledge of your bank is illegal whilst the vehicle is still financed. We caution bank clients who are experiencing financial difficulties not to respond to these advertisements but rather to approach their banks directly for assistance. This will avoid falling victim to such scams," explained Potgieter.
To avoid falling victim to the scam, people are advised to contact their respective banks for advice on their intention to sell a vehicle that is still under finance to an third part. People should ensure that a full settlement of the vehicle finance debt has been made before handing over a vehicle to any third party.
The public is also urged to contact the bank immediately if they are experiencing difficulties paying their vehicle installments as all banks offer advice and alternative remedies to clients experiencing difficulties honoring their payments.
Debt counseling is also recommended first should people consider selling their vehicles as a result of financial pressure among others.
SABRIC is a Section 21 company, formed by South African banks to support the banking industry in the combating of crime. SABRIC’s clients are South African banks and major CIT companies.
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