Recently, I have begun looking at a couple of things with interest, and the one thing that caught my eye, is the whole dodgy arena of car finance, and especially that. Here are  my observations:

I currently do not have car finance, since I paid off ALL my debt this year. In looking at possible replacements for my car, and just plain shopping around, I've discovered how many South Africans, especially in and around Gauteng live so impossibly above their means.

The National Credit Act Means Nothing
The much-lauded and long awaited credit act, is in my opinion a total failure (what would one expect from the ANC). Credit vendors are just as eager to lend recklessly as before, where, on the other hand, banks have become real bastards when it comes to home loans. They won't grant home loans to people who have more money than I do, and have spotless credit records, yet at the same time they are still pushing personal loans like its 2007. Their new tack though is to force insurance down people's throats when loans are made, this way they can make even more money, and the insurance sold is a crappy piece of shit that won't even cover the debt.

The Act stipulates providers need to check if people can actually afford the debt, I've found you can thumb-suck the figures and when you sit with a calculator you can see that this person is just getting by on R900 a month after all debit orders go off... and he still gets approved

Debt counselling means shit in this country. Looking at Hellopeter.com there are scores of complaints from people who are under debt review and the banks STILL carry on harassment, and blacklisting and handover procedures.

Balloon Payments
Some creative accountant must have come up with this hare-brained scheme, but this is the big trick that allows people who haven't got no money to drive around in that new Merc or BMW and be the envy of their friends. Then when the term comes to an end, they want to cry and vent their spleens on Hellopeter.com and threaten to take the matter to the ombudsman, when in reality they were that stupid to buy the car with that crappy scheme in the first place. Again, the National Credit Act gives a big *thumbs-up* to balloon payments while the rest of the modern world has regulated this horseshit out of industry and commerce. The price of new automobiles are what they are in SA because there's a willing market for vehicles at those absurd prices, and its never been easier with balloon payments. South Africans seem to always want to drive the latest 4x4, to be the envy of the guy next door, its all in our country's culture. If we could abandon that culture I think SA would be a very different place today.

Shitty Credit
In South Africa, partly due to ineffective and poor regulation and the ANC's vulnerability to being manipulated, we have financial institutions who do loans, and are actually registered and get away with criminal acts on a credit agreement. Criminal acts such as insane early settlement figures, insane interest charges (1000% or more) on arrears, etc... African Bank is one such bunch of crooks.

Debt Collections
Some bright spark attorney bastard came up with the idea of creating collection agencies- law firms that sit all day and harass people to pay for their "handed-over" accounts. The two big names are MBD Attorneys and JM Attorneys with VVM Attorneys on the up and coming path to being the third one amongst the "big boys". They will send you threatening SMS messages, and threaten to blacklist you, even for paid debts, or debts that go back the 1990's or even in some cases, 1981! Recently, MBD Attorneys were disbarred by the SA Law Society for their clandenstine behaviour, and about a month later, I noticed on their building they changed their name to MBD Credit Solutions. They refuse interviews (threw Carte Blanche out onto the street). Apparently their M.O. is illegal and they are being sued by someone who is taking them to task for their threatening behaviour.

South African Banks
SA banks are the biggest criminals on the entire continent as far as I am concerned. They thrive on fucking you around as much as possible. Miss a payment or pay something late and they will put you on ITC/Experian faster than the speed of a wounded leopard. But try and pay your debt in full, in cash and see how much red tape you'll encounter, along with poor service.

The concept of balloon payments is not new, it has been around for a while apparently, but was very uncommon as far as I know most people bought their cars on the ISA agreements.

Then in the late 1990's when prices of cars became astronomical it was used as a tool to allow the masses to afford such expensive machinery, and ensure ongoing dealership survival in arguably one of the dirtiest business sectors in SA, if not, the world.

Then Zunaid Moti came along and took it even further, with his FutureFin company (see noseweek) and his absurd R2000 per month per million horseshit.

The current interest rate on car finance is 14 - 17%. Some people suggest we should be getting prime + 2%, but that ain't going to happen all that the net result will be is an increased risk for a cardiac infarction after you've fought the banks in vain.

Absolutely shocking indeed...

many credit providers have seemingly being trying to thwart the debt review process since the implementation of the National Credit Act,

One just has to browse around on Hellopeter.com to see that this is the wholesome truth!

SA banks are NOT your friend, regardless of their marketing blurb. They REALLY are out to get you, and they don't care about your complaints either, its just water off a duck's back as far as they are concerned. SA banks take their cues from overseas markets, particularly the USA, where the banks there can also get away with murder I believe. Then they add their uniquely South African form of criminality and unleash that on the innocent public. One can read virtually any issue of Noseweek, and at least one bank is mentioned as being corrupt or being involved in shady dealings, on any given month. Take for example Absa, who bankrolls known criminals repeatedly (Theodosiou Brothers as a example off the top of my head). (ABSA features most prominently in Noseweek). Many think the Ombudsman is the cure-all to the problems, think again. The Ombudsman is in many cases I've seen, in favour of the bank so the consumer is screwed regardless.

The banks (and most businesses in SA) can get away with this because of the cost of litigation in SA, which as you can see in the above article, is a very costly affair and beyond the reach of most. So they play the odds that the customer will not sue them. They learnt this from the United States and its so prolific it even appears in popular culture (The Rainmaker - John Grisham)

In other countries, litigation is more accessible so the banks toe the line.