Buying a Car: A Case study:

Perhaps this blog should be headed:” Buying a Car: What not to do!”

A motor vehicle is one of your more important assets and it is advisable to go about purchasing one in a responsible and sensible manner so that you do not end up losing money and a great deal of sleep.

A client of ours bought a small car privately from one of her “friends” in December 2016. The agreed purchase price was R 60000.00. She did not want to work through a dealer and also did not want to get finance for the vehicle but wanted to pay for the car out of her salary each month. She felt she was getting a good deal. She agreed to pay the seller R 5000.00 per month for 12 months. They agreed that she could take possession of the car and that she would insure it at her own cost.  All well and good so far. She started making her monthly payments. After five months she established that:

  1. The vehicle did not belong to the seller but to the seller’s mother’s deceased estate.
  2. The vehicle was still the subject of a credit instalment agreement with a commercial bank and the amount still owed to the bank was more than R 70000.00.
  3. The estate had not as yet been wound up.

In short this meant:

  1. That the seller had no right whatsoever to sell the vehicle to her.
  2. The vehicle in fact still belonged to the bank until the final instalment had been paid; and
  3. She had paid R 25000.00 of the purchase price to the seller who had no right to the purchase price or any portion it.

The seller had in fact committed fraud as she had sold an asset which did not belong to her and had pocketed R 25000.00 which also did not belong to her.

Our client however wanted to keep the car she had bought; and did not want to become involved in a fight with seller about the money and the car. She also did not want to lose the car to the bank or the estate.

Well; the story does have a happy ending.

We contacted the bank and the estate on behalf of our client and disclosed fully what had transpired. On our client’s behalf; we then entered into an agreement with both the bank and the estate that our client could retain the possession of the car provided she continued to pay its insurance ad that all further payments were made to the estate; and that the estate in turn would settle the amount due to the bank in terms of the deceased mother’s agreement with the bank.

Let’s be frank; our client is lucky because she could have lost the car to the bank and/or the estate.

In addition she could also have lost the R 25000.00 she had already paid to the seller; who, as far as we know, has no means to repay her that sum; despite the fact that our client could have laid a charge of fraud against her.

Makes you think, doesn’t it?

Solution: Be very careful when entering into private sale agreements even with your friends!

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Thank you.

The Legal Advice Office Team.