Being “Blacklisted” refers to a period when credit bureaus only held records of consumers negative credit profiles – which was based primarily on the frame-work of a person’s financial inadequacy to honour their debts and therefore the only reference of a person’s credit worthiness. However, in 2011, the National Credit Regulator, (N.C.R), removed the term ‘Blacklisted’ from the South African credit industry’s vocabulary word list, dissolved the practice and was replaced with a credit report.
While being blacklisted was a record of a person’s negative financial history: a credit report holds record of both “the good and the bad,” depending on the ratio will determine your credit score and whether-or-not you qualify for a loan – be it a home-loan or for vehicle finance. Therefore, it is within your best interest to find-out both your credit-score and your credit worthiness: as every consumer is legally entitled to one free update of their credit report per year. Yet creditors still use the term, “Blacklisted,” to bully ignorant consumers into paying-off their debt as quickly as possible. However, if you do have a bad credit rating and you know that you do not qualify for vehicle financing – then what other alternatives are there?
- ‘Cash is King.’ Though ideal, for most car-buyers a cash deal is just not realistic. Something to consider is bargain-hunting for a car under R50 000 – I assure you they are out there! “Voets-toets,” or “as is,” is the most likely advertising slogan for these vehicles and will require further financial outlay to properly service and repair the vehicle. However, if the vehicle is road-worthy and not a Code 3 – it is still a good option.
- If at all possible, avoid loan sharks or dodgy pawn brokers.
- Instead opt for the F.F.F principle – that is to approach family, friends and fools to lend you money or if they would in some way be willing to subsidise you. This is why relationships are so important, and you should never burn bridges with your peers. Do not be critical of who you ask, even from people whom you still owe money – welcome any and all financial aid. Offer to put-down a seventy-percent deposit and then to pay-back the money in the shortest time possible.
- Lease or rent to own. This is becoming extremely popular in South Africa, especially among first-time car-buyers who are void of any credit history; and considering that six-million South Africans are noncredit worthy for any type of loan – renting a car with the intention to one day buy it makes for a highly viable option. There are hundreds of companies around the country, vehicle dealerships and car-rental agencies included who offer rent-to-buy. Most require a minimal deposit of R10 000+, premiums start from R3500+ per month, along with a 12-to-72-month rental-plan. Included in the monthly instalment is comprehensive vehicle insurance, satellite-tracking, emergency roadside assistance as well as a full-term warranty and service plan. The only documentation required is a letter of employment, three-month’s salary slips likewise three-month’s bank statements, proof of address and a certified copy of your ID and driver’s license. At the end of your lease, you have the option to then take ownership of the vehicle or open a new rental agreement. However, do not take anything for granted or at face-value, ensure you have a meticulous understanding of the fine-print – as some rent-to-buy companies ask for a non-refundable deposit.
- Alternative financial institutions. Also known as microlenders. Depending on your credit-score in which instance, your credit-score is too low for the bank, yet well within the margin of a microlender who is willing to offer you a loan or you may also fall within that ‘void,’ of insufficient income for a vehicle loan according to the bank but just enough for a microlender. Notwithstanding your circumstances may change, although the bank may have declined you, there is the possibility that within the next three to six-months you would have rectified your credit status and therefore you should be able to reapply for vehicle financing. There are also a number of dealerships who offer this kind of service for “blacklisted” customers – much like how they facilitate brokering a deal to finance your vehicle. The dealership does the exact same with the microlender – often subsidizing a cash portion of the transaction to help you in the event of a deficit. But be warned the interest rates on this kind of vehicle purchase transaction is sky-high, and the creditor may also demand an asset as collateral for you to secure the loan.
Written by Dean Joseph