Vehicle Finance and Credit Act Compliance: A Guide for South African Automotive Dealers
Dealer Compliance with the National Credit Act
Automotive dealers involved in vehicle financing must comply with the National Credit Act (NCA). Understanding these requirements protects dealers and customers.
NCA Requirements for Dealers
Dealers offering finance must:
- Register as credit providers (if applicable)
- Conduct affordability assessments
- Provide clear disclosure
- Follow fair lending practices
- Maintain proper records
Vehicle Verification Requirements
Compliance includes verifying:
- Vehicle registration details
- No existing encumbrances
- VIN and engine numbers
- Ownership documentation
- Vehicle value and condition
Affordability Assessment
Before approving finance, assess:
- Customer income verification
- Existing debt obligations
- Expense estimation
- Repayment capacity
- Credit bureau information
Documentation Requirements
Maintain records of:
- Customer identification
- Affordability assessments
- Vehicle verification results
- Finance agreements
- All correspondence
Compliance Risks
Non-compliance can result in:
- Regulatory penalties
- Agreement invalidity
- Consumer complaints
- Legal action
- Reputational damage
Best Practices for Dealers
Ensure compliance by:
- Understanding NCA requirements
- Training finance staff
- Implementing verification procedures
- Maintaining organised records
- Conducting regular audits
Conclusion
NCA compliance is essential for automotive dealers offering vehicle finance. Proper procedures protect dealers from regulatory action and ensure fair treatment of customers.