No one gets a car loan with the intention of defaulting and getting their cars repossessed. But life happens. And if you’ve ever found yourself going through the repossession process, you’re likely very familiar with the overwhelming feelings of shame, fear, and guilt that can come with it.
It can feel like your world is crashing down. And rightly so. Having your car repossessed is not only emotionally jarring, but it can also come with serious financial consequences. You could end up with legal fees, long-term damage to your credit record, and a huge blow to your confidence.
But you’re not alone. Tens of thousands of car owners fall behind on payments every year. While some owners are able to catch up, 5000 – 7000 vehicles get repossessed every month in the country.
The most important thing to remember is: this is not the end of the road. You can recover from this, and even come out on top, but it starts with being proactive.
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What Is car repossession?
Car repossession happens when you take out a car loan, but for one reason or another, stop making payments. Your contract (credit agreement) allows the lender to legally take the vehicle back to recover what you owe.
Here in SA, this usually happens when you’re about three months behind on your payments. If you don’t fix the default or voluntarily surrender the vehicle, your credit provider can obtain a court order to legally repossess it.
Repossession is governed by the National Credit Act (NCA, Act 34 of 2005) and, in the case of retail contracts, the Consumer Protection Act (CPA, Act 68 of 2008).
According to the law, your creditor must first send you a Section 129 notice. This notice serves as a written notice to let you know you have defaulted and to give you a chace to fix your default.
If you settle the missed payment within 10 business days, the default is resolved, and you’re good.
But if you continue defaulting, the creditor can approach the court for an order to repossess the vehicle.
Some car owners try to stay ahead by voluntarily surrendering the vehicle. Especially if they’ve lost their job or are dealing with a major life event like a large medical bull. Taking this route can reduce legal costs and limit the impact on your credit score.
Know your rights: Here are things the creditor can and cannot do
It’s natural to panic when you’re facing repossession. But you have rights and creditors must follow the law. Breaking the law to repossess your car could be deemed illegal.
Here’s what you should know:
- Section 129 Notice is Required: Your creditor must send you a written warning informing you that you’re in breach of the credit agreement. They only needs to prove that this was delivered to you (e.g., by registered mail). They don’t need to prove that you personally received or read it.
- No Harassment or Threats: Creditors may not threaten or harass you. Repeated calls at odd hours, abuse and illegally entering your property constitutes harassment. If any of this happens, report the matter to the polic or National Consumer Commission.
- No Forced Entry: A repossession agent can tow a car parked in a public space or an open driveway. But they need a court order if it’s locked behind a gate or garage. Breaking into a locked garage is illegal and can be prosecuted as theft and trespassing.
- Proper Identification Required: Repossession agents must show valid ID and a letter of authority or court order. You have a right to ask to see this before allowing anything to proceed.
- Document Everything: Take photos, videos, and notes of everything that happens. But make sure you do it safely and calmly. This protects you if your rights are violated. And you get to collect a ton of evidence should you need to escalate the matter legally.
- Don’t Resist Physically: No matter how unfair it feels, do not physically block or resist the repossession. This could lead to a confrontation and potential criminal charges. Stay calm, document everything, and follow up legally if needed.
What to do when you start defaulting
The best defence against repossession is early action. As soon as you know you might miss a payment, take these steps:
#1. Talk to Your Lender
Don’t go silent. Reach out to your bank or creditor to explain your situation. Many are willing to negotiate payment terms if they see you’re making an effort. Repossession is time-consuming for them too, so they’ll often want to avoid it.
#2. Renegotiate your terms
The National Credit Act allows you to request a payment holiday or reduction. Your creditor isn’t required to accept it, but they are encouraged to consider your request in good faith.
#3. Refinance or merge
If your credit record is still healthy, you might be able to refinance the loan or merge it into a lower-interest option. This could help reduce your monthly payment. While it’s harder if your score has dropped, it’s worth investigating as a very early option.
#4. Sell the car yourself
Selling the car before it’s repossessed allows you to get a better price than a forced bank auction. Then you can use the proceeds of the sale to settle your loan. If the selling price doesn’t cover the full loan, you’ll still owe the shortfall. But it will likely be smaller than if the bank sells it.
👉 Remember: Until the loan is fully settled, the car belongs to the bank/creditor. Both the buyer and the bank must be made aware of the situation.
If the settlement amount is less than what you sell it for, you might even walk away with a small amount of cash in your pocket. If it’s more than the sale price, you’ll need to make plans with the bank to pay the shortfall.
#5. Voluntary Surrender (With Caution)
If there are no other options, you can voluntarily hand the car back to the bank. This can help you save on the legal costs and fees that come with forced repossession. But you’ll still be liable for the shortfall if the car is sold for less than what you owe.
Use this option only after trying alternatives like selling the vehicle or debt review.
#6. Enter Debt Review
Debt review (also called debt rescue) is a legal process that helps protect your assets while restructuring your debt. Under debt review, a debt counsellor will assess your financial situation (income, essential expenses, debt payments) and negotiate lower payments with your creditors.
During this process, creditors are not allowed to repossess your car without the court’s or your debt counsellor’s consent.
You can find reputable debt counsellors through organisations like:
#7. Cut Expenses and Budget
As soon as possible, review and tighten your household budget. Cut out non-essential costs, boost your income (overtime, part-time jobs). Redirect every debt into staying current with your high priority debts.
#7. Cut Expenses and Budget
At this point, your vehicle has been a money pit, but you can flip the script. Ride-hailing apps like Uber or Bolt gives you an opportunity to earn with your car. Even driving in your free time, before and after work, can help you cover installments.
Not a fan of driving? Consider renting your car out on a car-sharing platform like Tarlen Carshare. It’s a way to earn without driving yourself, giving you extra breathing room financially.
Although the carsharing model is new in South Africa, many vehicle owners in South Africa are already using Tarlen to turn their cars into income-generating assets, especially during tough financial patches.
Remember: Doing something early (even if it’s just a phone call) signals to creditors that you’re taking responsibility.
Rebuilding after repossession
Having your car repossessed can feel like a huge step backwards, but it doesn’t have to be. Like every individual that has been there before you, a healthy financial life is still possible. Here’s how to bounce back:
- Settle the Shortfall:
If there’s a shortfall after the sale/auction, focus on paying off the deficiency to put the debt behind you. If possible, negotiate a lump payment or affordable installments. Make sure you request for the settlement agreement in writing.
- Create a savings plan:
This is a chance to start afresh financially. Make a list of your expenses on a spreadsheet and aggressively cut back on the non-essentials. Redirect your spending into an emergency fund and watch it grow. Make a routine of saving first when you receive your salary. Even small, this regular savings can help you rebuild your confidence and protect against future crises.
- Rebuild your credit:
Start small and pay other credit accounts. After two years, a settled default will drop off your credit profile. If you don’t have one, get a credit card, use monthly but sparingly to show consistent payment and build back your credit. The goal is to build a good track record for the next few years.
Common questions about vehicle repossession
Q: Can I buy my car back after it was repossessed?
A: In rare cases, yes. Some lenders could allow this, but it’s not guaranteed and depends on their internal policy.
Q: What about my insurance?
A: If your vehicle was insured, notify your insurer immediately. If you’re planning to sell or surrender, don’t cancel the policy until the vehicle is no longer yours. You might qualify for a partial premium refund.
Q: What about my insurance?
A: If your vehicle was insured, notify your insurer immediately. If you’re planning to sell or surrender, don’t cancel the policy until the vehicle is no longer yours. You might qualify for a partial premium refund.
If you have a credit life cover, it may cover part of the shortfall if the car is repossessed.
Q: Can I go to jail for defaulting?
A: No. Loan default is a civil matter, not a criminal offence. You cannot be jailed for missing payments.
Q: Can they take my car without warning?
A: No. In South Africa, your creditor must give you formal notice (like a Section 129 notice) and follow legal processes before repossessing.
Q: What if I get sick or lose my job?
A: Speak to your creditor immediately. Ask for a payment holiday or restructure. If they won’t assist, apply for debt review quickly to protect yourself from repossession.
Joining a ridesharing or a carsharing platform like Tarlen is another great step to supplement your income and avoid falling behind on your payments.
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