Banks repossess around 6,000 to 7,000 Cars per month

Reports have said that around 6,000 to 7,000 vehicles are being repossessed each month due to the owners not being able to afford the payments. The amount of cars being repossessed means that the banks are losing about R500m to R600m worth of income each year.

Although the average price of a repossessed car is about R135,000, it was recently reported that ABSA bank took back a R5m Ferrari.

So why is this happening, you might wonder. Well, during recent years the market below the age of 35 who earn R10,000 to R15,000 rose rapidly, which caused a negative effect on Absa’s credit extension. It was said that about 35% of all applications for credit currently received a negative rating, while the other 65 percent continue to be considered. All in all only around 30% of people are approved for credit.

Tougher credit laws are causing a problem, and this is a main factor in the reason for cars being repossessed. But who is to blame, the buyer or the bank?