Say NO to "on-the-road" fees

[ChefDJ]

.co.za

Volkswagen Financial Services ordered to pay back ‘added fees’ to South African customers
8 April 2019

The National Consumer Tribunal has ordered Volkswagen Financial Services to stop charging customers for ‘on-the-road fees’ and pay back added fees it has already charged.

This follows a 2017 judgement by the National Credit Regulator (NCR) which found that the fee is not permitted to be charged on credit agreements by the National Credit Act.

In the judgement on Monday, the Tribunal ordered that Volkswagen Financial Services must stop charging customers on-the-road fees on credit agreements from 10 April 2019.

The company – which is a separate entity from Volkswagen South Africa – was also ordered to calculate the total charges of the fees (including interest) added to the on-the road-fees, and to refund customers.

Following this, it must submit a report to the NCR to confirm that these refunds had taken place.

According to insurance company Hippo, an on-the-road fee – also known as a ‘dealership’ fee or ‘service and delivery fee – is added for extras such as pre-delivery checks‚ valets and admin.

The cost can be anything upwards of R4,000 on cars with a price tag of under R200,000.

When asked for comment, Volkswagen Financial Services said that it was currently reviewing the ruling and obtaining legal advice.

Understanding what is being refunded

Speaking to BusinessTech, legal advisor at the NCR’s investigation and enforcement unit, Ravashnie Venugopal, clarified that the refund mentioned in the judgment does not apply to the on-the-road fee itself, but rather the fees levied on the on-the-road fees.

“Any charges, interest or additional fees which were charged on the on-the-road fees must be refunded,” she said. “Because the consumers did benefit from these fees, the Tribunal couldn’t ask for consumers to be refunded for the full amount.

“Instead, Volkswagen will have to refund those additional fees on the on-the-road fees,” she said.

She added that going forward Volkswagen will not be allowed to charge on-the-road fees at all.

Venugopal said that it is possible for Volkswagen to appeal the judgement, in which case it would then head to the High Court.

Source

 

[deveng]

R 5000 at prime over 72 months...is 9 000....

Everyone is ready to take the buyer's money....even the buyer's bank it seems /my opinion/

 

[Veedub]

The NCR are just not getting it...really looking forward to when we will get to make our submissions to them. The 'fee' is between the customer and the dealer. It is not a bank 'fee'. The banks merely include it into the finance agreement for customers who prefer not to pay cash for it. Just like extras on the vehicle.

That aside, I refuse to pay these exorbitant costs, on principal. If the dealer has all these extra 'costs', then they should add it to the sale price of the vehicle and advertise it accordingly.

Just bought two cars recently and on both occasions only paid a license and reg fee of R1500 - which I believe is acceptable.

Dealers have already found a way around this, btw. They now load these fees to the sale price of the vehicle and then add license and reg afterwards. Check your OTP's carefully and refuse these costs.

 

[Twinz]

Lets hope the customer wins the refund. VW goes from one scandal to the next.

 

[Veedub]

Why? The customer agreed to have these dealer added costs included in the finance agreement. It was not forced upon them by VWFS. It's common sense that anything added to your finance contract will incur interest costs. If the customer didn't want that, then they should have paid cash or asked the dealer to reduce/cancel the costs.

We are hoping the High Court has more common sense than the NCR.

---

BTW...it's not a VWFS thing...this is Industry practice and all finance houses are facing the same issue with the NCR.[/align]

 

[HitokiriZed]

The customer agreed to have these dealer added costs included in the finance agreement. It was not forced upon them by VWFS.

The question asked here is more to the legitimacy of the costs. Most often dealers (I am assuming you are a dealer based on your manner of writing) include this fee over the cost of a vehicle. The argument is that the vehicle cost should absorb all costs pertaining to delivery of said vehicle.

Essentially the dealer charges the consumer the cost it in incurs for doing business - which is ethically ambiguous (although more unethical IMHO).

BTW...it's not a VWFS thing...this is Industry practice and all finance houses are facing the same issue with the NCR.[/align]

True, many parties doing the wrong thing never makes it right, neither does it justify the act. VW is one of the (if not the) leading vehicle brand in South Africa in terms of sales. This makes it a target, but also frames an example from which smaller players build on. Rectification here is expected to cascade to smaller brands.

---

R 5000 at prime over 72 months...is 9 000....

Everyone is ready to take the buyer's money....even the buyer's bank it seems /my opinion/

Actually only R6,624.

 

[Kyle]

Honestly these "OTR" fees are just a way for dealerships to make more money and I hope they would become ruled out completely.

The costs involved should be part of the purchase price of the vehicle. I've noticed that some dealers use this fee to make a few extra grand.

Take the example below :

This car was advertised for R539K, the quote below was what Audi presented to my brother

This is why I agree these things should be carefully regulated.

 

[supertramp]

Hi Chef,

This was also spoken by about yourself on the BMW issue pertaining to their own "on the road costs" back in 2017, based on this I escalated an email to Donfords Dealership in CPTN and posted my answer from them on your thread as it was still under investigation at that stage …………. now at that stage it was said that they had to pay the consumer if the consumer could provide evidence on a purchase document where it referenced these costs...……mine did and as I said in your post back then I added their actual mail to myself on the thread as well as another Forum member!


I wonder what the BMS SA stance is now :fencelook:

 

[ChefDJ]

I remember that thread:

https://www.bmwfanatics.co.za/showthread.php?tid=82959

 

[Twinz]

Bought a Volkswagen in SA since 2007? You may be owed thousands - here’s how to claim

https://www.businessinsider.co.za/volkswagen-fees-refund-2019-4?

 

[supertramp]

What is BMW SA stance on exactly the same issue, where are the dealer reps's on the forum?????? :fencelook:

 

[Twinz]

What is BMW SA stance on exactly the same issue, where are the dealer reps's on the forum?????? :fencelook:

I would like to know this too...time to pay back the money!

 

[Veedub]

The NCR ruling is not about the legality of charging this fee...its about including the fee into a credit agreement...section 102 of the nca is clear on what fees may be added to an agreement...if the dealer changed the wording from 'on the road' to 'licence and reg', then its fine. Defending the value of the cost is another point altogether.

Our issue is that section 102 clarifies what fees the credit provider may charge...on the road costs is not charged by the credit provider...its charged by the dealership.

In terms of a possible refund...it would relate to interest costs incurred as a result of including this fee into the credit agreement...so the fee itself won't be refunded, just the interest expense part, which depending on how the amortisation is modelled, can end up being a few rands and cents.

And again, let me state...these costs are blatant theft and you should refuse to pay it...I don't.

 

[supertramp]

I remember that thread:

https://www.bmwfanatics.co.za/showthread.php?tid=82959

Just thought I would test Donfords BMW dealer with this element and hereunder was the email response from them this morning:

Hi,

A final verdict has not been reached by the National Consumer Tribunal according to Financial Services and also be advised that the on the road fee that was charged was a dealer fee and not a Financial Services fee.

When a final verdict is reached and they are ordered to refund all relevant customers will be contacted.

Kind Regards

Donford Pty Ltd
Helderberg
F & I Business Manager
A Registered Representative of Dealer Financial Services FSP 34
47 Mynhardt Street, Gants Center N2
Strand, 7140
Tel: 021 8530080
Fax: 021 8530066
Web: http://www.donford.co.za



:fencelook:

 

[VernonD]

I remember that thread:

https://www.bmwfanatics.co.za/showthread.php?tid=82959

Just thought I would test Donfords BMW dealer with this element and hereunder was the email response from them this morning:

Hi,

A final verdict has not been reached by the National Consumer Tribunal according to Financial Services and also be advised that the on the road fee that was charged was a dealer fee and not a Financial Services fee.

When a final verdict is reached and they are ordered to refund all relevant customers will be contacted.

Kind Regards

Donford Pty Ltd
Helderberg
F & I Business Manager
A Registered Representative of Dealer Financial Services FSP 34
47 Mynhardt Street, Gants Center N2
Strand, 7140
Tel: 021 8530080
Fax: 021 8530066
Web: http://www.donford.co.za



:fencelook:

I got a similar letter last year but from Donford in Stellenbosch when I ask about the R4500 I paid when buying the F30 from them.

 

[deveng]

I think my calculation is right... principal of R 5k , 10.25% , compounded monthly for 6 years is R 9 222....main point is that it is almost 2x the principal .... that's the issue that I have ito the principal vs total payment

The customer agreed to have these dealer added costs included in the finance agreement. It was not forced upon them by VWFS.

The question asked here is more to the legitimacy of the costs. Most often dealers (I am assuming you are a dealer based on your manner of writing) include this fee over the cost of a vehicle. The argument is that the vehicle cost should absorb all costs pertaining to delivery of said vehicle.

Essentially the dealer charges the consumer the cost it in incurs for doing business - which is ethically ambiguous (although more unethical IMHO).

BTW...it's not a VWFS thing...this is Industry practice and all finance houses are facing the same issue with the NCR.[/align]

True, many parties doing the wrong thing never makes it right, neither does it justify the act. VW is one of the (if not the) leading vehicle brand in South Africa in terms of sales. This makes it a target, but also frames an example from which smaller players build on. Rectification here is expected to cascade to smaller brands.

---

R 5000 at prime over 72 months...is 9 000....

Everyone is ready to take the buyer's money....even the buyer's bank it seems /my opinion/

Actually only R6,624.

---

 

[HitokiriZed]

I think my calculation is right... principal of R 5k , 10.25% , compounded monthly for 6 years is R 9 222....main point is that it is almost 2x the principal .... that's the issue that I have ito the principal vs total payment

Your calculation is incorrect - but so was mine (lol) I used the incorrect prime rate :hammerhead:.

Based on repayments and the expected amortisation of a deal the cost of financing R5000 over 72 months at 10.25% per annum is R6,714.78. Meaning you'd be paying R1,714.78 worth of interest - if you paid your contract as expected.

This is still substantial - you'll be paying 34% more than the fee (which you shouldn't be paying) in the first place.

 

[deveng]

agree, yes I see my error, thanks !

I think my calculation is right... principal of R 5k , 10.25% , compounded monthly for 6 years is R 9 222....main point is that it is almost 2x the principal .... that's the issue that I have ito the principal vs total payment

Your calculation is incorrect - but so was mine (lol) I used the incorrect prime rate :hammerhead:.

Based on repayments and the expected amortisation of a deal the cost of financing R5000 over 72 months at 10.25% per annum is R6,714.78. Meaning you'd be paying R1,714.78 worth of interest - if you paid your contract as expected.

This is still substantial - you'll be paying 34% more than the fee (which you shouldn't be paying) in the first place.