Friday, February 3, 2023

Stick to the road with Hennie

By Alwyn Viljoen

Proudly sponsored by Toyota

Vehicle finance options for blacklisted clients

Estimated reading time: 4 minutes

“Why can’t I just lease a bakkie instead of buying it?” The question came from young Greyling, who has just returned from another stint as migrant labourer in the United States.

He has been working seasonally in the States since leaving school and saved his dollars to build up a nice little herd of Nguni cattle, for which he rents grazing on our farm on a sharecrop basis. He now wanted a used bakkie, but having no local credit record, his application has landed on the pile of 70% whose applications are declined by vehicle financiers.

Lees dit in Afrikaans.

“You are as good as being blacklisted,” I told him. “This is usually due to missed payments, but in your case, it’s having no credit history.”



We had just checked his credit score online. This score ranges from 300 to 850, with a score below 526 meaning that banks won’t
even look at you. Greyling’s score was non-existent.

The lowdown on leasing

So, I called on Mbali, our genuine Zulu princess who runs the farm office. Since buying her own car, she has become an expert on advising her extended family, many of whom are blacklisted, on other options to borrow money for a vehicle.

She told Greyling he could lower his monthly payments with a lease, but cautioned that all lease contracts come with strict distance limits, on top of which the driver must keep the vehicle in near-showroom condition.

“These conditions won’t work for farm bakkies, which is why in your case I don’t recommend leasing, especially not one with a balloon payment,” she said.

“If you don’t adhere to the service schedules, or use only the approved and always very expensive repairer to fix something, you will pay extra. You will also pay a penalty for each kilometre exceeding the agreed-upon distance. Every tiny dent on the bin adds to this penalty amount, as my uncle learned at his cost. As for a balloon payment, it only postpones the payment pain,” she advised.

The rent-to-buy route

I had to chip in here to defend leasing. After all, we lease our farm lorries, because the payments are 100% tax deductible, and we get new trucks every few years that go much further on a litre of diesel than the old Hino we still use as a runabout on the farm.

Mbali pointed out that Greyling has to pay tax before he could claim tax. Besides, he should ideally register a business and hire an accountant to get all the tax benefits from expenses for work, such as a lease agreement.

“Meanwhile, your only option is rent-to-buy,” she told him. “Several companies are using these contracts, because they do not fall under some of the restrictions the National Credit Act places on blacklisted consumers.”

“I had a look at rent-to-buy,” Greyling said. “But I have yet to find any that is cheaper than an instalment.”

Find out how to spot a scam.

“This is because the premium includes rental costs, comprehensive and third-party insurance, a tracking device and a service plan. If you add all those amounts onto your instalment, you’ll see the difference is what you pay for a financier to ignore your credit record and trust you to pay up each month,” Mbali countered.

Easy buy, easy sell

“But where to go for the best deal?” Greyling asked.

“Check out the website of Planet 42,” said Mbali. “If you qualify on their platform, you can pick a vehicle in your price range from over 700 dealers that have signed up with them – and Planet 42 will then buy the vehicle and rent it to you. After six months, when you go to the States again, you can end the contract, paying a month’s cancellation fee. Then you rent a newer model when you return.

“Douglas Adams did write that 42 is the answer to life, the universe and everything,” I said.

This got only blank looks. “Seems no one reads the classics anymore, but you can take her advice,” I told Greyling. “She knows whereof she speaks.”