Browsing: On the Road Fees

SCA dismisses NCR appeals against car finance firms over on the road fees. Rules on the road fees may form part of the car price if disclosed. Orders safeguards to protect consumers from hidden on the road fees For many South Africans, the excitement of buying a car often comes with a sting in the tail in the form of the mysterious “on the road” fees quietly added to the deal. These charges, covering licensing, pre-delivery inspections, number plates, and initial fuel, have long been bundled into credit agreements without consumers fully understanding them. The National Credit Regulator (NCR) sought to end this practice, accusing Volkswagen Financial Services, BMW Financial Services, and Mercedes-Benz Financial Services of violating the National Credit Act by charging these fees unlawfully. According to the NCR, the fees were not listed among the Act’s permissible charges and should never have been financed through credit. The credit providers countered that they merely financed the total purchase price negotiated between consumers and dealers, which included the disputed fees. They argued that these charges were not imposed by them, but were part of the dealer-consumer transaction and therefore outside the scope of the NCR’s authority. The battle reaches the Supreme Court The legal fight travelled through the National Consumer Tribunal and the High Court, where judges delivered conflicting rulings. Eventually, the Supreme Court of Appeal (SCA) in Bloemfontein was called to resolve the deadlock. In a unanimous judgment penned by Judge T Makgoka, the SCA dismissed the NCR’s appeals and ruled that “on the road” fees are not automatically illegal. The court found that when a consumer chooses optional extras, such as smash-and-grab tinting, alloy wheels, maintenance plans, or licence fees, and asks for these to be included in the financed amount, they become part of the car’s purchase price and therefore part of the “principal debt.” This interpretation affirms that the National Credit Act does not prohibit the financing of such fees, provided they are transparently disclosed and requested by the consumer. The judgment clarified that credit providers cannot blindly finance dealer-imposed charges without ensuring that the agreement complies with the law. Transparency becomes the law of the road While siding with the credit providers, the court warned that consumer protection cannot be sacrificed. It ruled that “on the road” fees may only be included in financed deals if credit providers follow strict safeguards. These include clear itemisation of every component of the fee, a documented choice for consumers to pay upfront or include the amount in the financed total, and full disclosure of the cost implications over time. Judge Makgoka emphasized that even small, hidden costs can quietly accumulate into substantial sums over 60- or 72-month repayment periods, and that vague labels like “service and delivery” cannot be used to conceal unrelated charges. The court’s message was that transparency is not optional. Credit providers must ensure that consumers understand what they are paying for, the total cost, and how interest will impact the overall repayment. A victory with conditions Although the credit providers prevailed, the court overturned previous costs orders against the NCR. It recognised that the Regulator had acted in good faith to protect consumers and was justified in seeking legal clarity. The judgment reaffirmed the principle that organs of state should not be penalised for litigating in the public interest, especially where legal uncertainty exists. Judge Makgoka also criticised the lack of transparency that had historically plagued these charges, noting that even seemingly minor “on the road” fees can generate significant profits for credit providers once interest accrues over the years. The ruling sends a clear signal to the industry: lawful financing must be accompanied by lawful disclosure. What it means for consumers The SCA’s ruling reshapes how car finance deals must be structured going forward. Dealerships and finance companies will now have to provide full disclosure when offering optional extras, and consumers will be better equipped to decide whether “on the road” fees should be paid upfront or financed. For everyday South Africans, the judgment signals a move towards fairness and honesty in car finance, where hidden fees can no longer quietly creep into the fine print, and where the true cost of credit is made visible from the start. Conviction.co.za Get your news on the go. Click here to follow the Conviction WhatsApp channel.

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Browsing: On the Road Fees