Get more Mail & Guardian
Subscribe or Login

Car owners still struggle to pay off their vehicle loans

South African car owners are still grappling with the negative economic impact of the Covid-19 pandemic, with many defaulting on their vehicle loan repayments.

A new credit stress report by research and analytics company Eighty20 showed that vehicle asset finance has seen a 32% increase in overdue loans year on year. 

The report is a clear indication that consumers have their backs against the wall, and when faced with the greater threat of eviction or foreclosure of their homes, are opting to sacrifice their vehicle loan repayments, said Neil Roets, the chief executive of Debt Rescue.

“South African households are clearly under pressure due the consequences of Covid-19, with many having lost their jobs or seeing a reduction of income. This continued stress placed on household income meant many had to make some difficult decisions,” Roets said in a statement.

TransUnion’s recent Consumer Pulse Study for the second quarter of 2021 showed that 13% of consumers cannot cover their vehicle insurance and 25% are not able to repay their vehicle loans after many households lost their income, and some their jobs, due to the lockdowns imposed from last year in response to the pandemic

On a more positive note, however, Experian South Africa’s consumer default index (CDI) said the rate at which people defaulted on their loans decreased in the second quarter of the year. The CDI measures the default behaviour of consumers with home loans, vehicle loans, personal loans, credit cards as well as retail loan accounts.

The CDI index improved from 4.33% in March to a reading of 4.03% in June 2021, Experian said, tracking lower than the all-time high of 5.68% observed in 2020 after the government first imposed a hard lockdown from March that year, which grounded all but essential services.

However, the report also shows that South African consumers’ debt remains high at R1.9-trillion. 

Surge in used car sales

Supporting this, there has been a surge in used car sales as some people sell cars they can no longer afford while others opt to purchase used vehicles rather than new ones.

According to Engineering News, digital motoring marketplace AutoTrader saw a 36% increase in searches for used vehicles in the second quarter of 2021 compared with the same period last year.

Roets said the automotive sector could be seen as a leading indicator of where the economy is heading. 

There are some signs of recovery after last year’s extreme lows, with the National Association of Automobile Manufacturers of South Africa reporting that domestic new vehicle sales increased by 24.6% in August 2021 compared to the same month last year.

Anathi Madubela is an Adamela Trust business reporter at the Mail & Guardian.

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Anathi Madubela
Anathi Madubela is a business journalist with a keen interest in the retail sector.

Related stories


If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here


Subscribers only

Fears of violence persist a year after the murder of...

The court battle to stop coal mining in rural KwaZulu-Natal has heightened the sense of danger among environmental activists

Data shows EFF has lower negative sentiment online among voters...

The EFF has a stronger online presence than the ANC and Democratic Alliance

More top stories

Constitutional court confirms warrantless searches in cordoned off areas unconstitutional

The law was challenged in response to raids in inner Johannesburg seemingly targeting illegal immigrants and the highest court has pronounced itself 10 days before an election in which then mayor Herman Mashaba has campaigned on an anti-foreigner ticket

A blunt Mantashe makes no promises during election campaigning

ANC chairperson Gwede Mantashe told people in Daveyton to stop expecting handouts from the government

Mbeki: Social compact the answer to promises made in ANC...

Former president Thabo Mbeki urged business and government and society to work together to tackle issues such as poverty, unemployment and poor services and infrastructure

South Africa needs to make pension system more inclusive, study...

South Africa’s pension system is ranked 31st out of 43 countries, receiving a C-grade which indicates major risks and shortcomings that should be addressed

press releases

Loading latest Press Releases…