The National Credit Act (NCA) states that credit granters may charge an initiation fee of no more than R1140 and a monthly service fee of no more than R57 but the motor finance houses are simply applying these maximum amounts routinely.
Many car salespeople are implying that the charges are mandatory.
Kagiso Kgasi, a legal adviser with the National Credit Regulator, pointed out: "We had to put maximum allowable fees in the act but the intention was for consumers to compare quotes from various dealers and negotiate."
So, if you are made to pay an initiation fee, you have to be given the option of paying it separately so that it doesn't inflate the amount being financed over four or five years.
As for the "delivery" fee allowed by the NCA, motor dealerships routinely added this to a contract, even though in most cases they don't actually incur any delivery costs - their clients make the journey to the dealership to collect their new purchase.
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