If I voluntarily surrender my financed vehicle, will my debt review monthly payment decrease?
I’ve been paying an amount of R3600 on my car instalment alone under debt review – excluding other accounts. If I surrender it and the banks sells it on auction, and let’s say I was left with R40 000 to pay back the bank after the vehicle was sold with a lower amount on auction. Will my debt review instalment on my car also decrease?
Good day, Thank you for your question. If you voluntarily surrender your vehicle the law states that the bank must sell it for the best price reasonably obtainable. The problem however is the bank’s interpretation of “reasonable”. In most cases when the car is sold on auction you they will not sell it for the same amount which you still owe the bank, and you end up with a shortfall. You’ll still be liable for this shortfall, and if your debt review has a court order, the instalment will remain the same. If there is no court order yet, your debt counsellor should be able to negotiate an adjusted instalment. The account will then be treated more like a loan than car finance. You must keep in mind that the court order or debt review monthly contribution is calculated as a consolidated instalment. If one account is settled, those funds are then applied to the remaining accounts with an outstanding balance. Paying more on the remaining accounts than what was initially planned will shorten the time period of your debt review. If your car can be sold out of hand, and you can settle the whole vehicle account, provided that there is no court order in place yet, your debt review repayments can be reduced. Hope the information was useful. Kind regards