Vehicle finance when a buyer disputes the car
Why a South African buyer's instalments keep running while they dispute a car with the dealer, and what the dealer should record until it is settled.
By Achekam · · 5 min read · For Automotive businesses in South Africa
A buyer took delivery of a used SUV six weeks ago, financed through a bank. The gearbox has started slipping, the buyer says it was faulty from the start, and the dealership disagrees. The buyer's next message is a threat: "I'm stopping the debit order until you fix it."
For the buyer, that feels like leverage. In practice it is usually a mistake, and the dealer who understands why can give better advice, defuse the situation and keep the complaint on a track that can actually be resolved. This article explains how the two contracts in a financed vehicle sale relate to each other in South Africa, what the Motor Industry Ombudsman says about disputes, and what the dealer should record until the matter is closed.
Two contracts, not one
A financed vehicle sale involves two separate agreements. The first is the sale: the buyer buys the vehicle from the dealer. The second is the finance agreement: the bank lends the buyer the money, or sells the vehicle to the buyer on instalment terms, and the dealer is paid by the bank.
The Motor Industry Ombudsman of South Africa (MIOSA) warns consumers that the finance agreement with the bank is separate from the consumer's contract with the dealer. A dispute with the dealer therefore does not suspend the instalments. MIOSA's guidance on submitting a motor vehicle complaint sets this out alongside the complaint process.
Why the instalments keep running
MIOSA's warning goes further. A bank that is not paid may repossess and sell the vehicle and take legal action for the balance. A buyer who stops paying because of a quality dispute with the dealer can therefore end up without the car, still owing money, and with the original complaint unresolved.
A dealer who explains this early, calmly and in writing, often prevents the situation from escalating. It is not the dealer's job to give the buyer legal advice, but pointing the buyer to MIOSA's own guidance is a helpful step that costs nothing.
When the bank may be a supplier too
MIOSA adds a qualification: depending on the agreement, the bank may in certain circumstances also be regarded as a supplier under the Consumer Protection Act. Whether that applies depends on the finance agreement and the facts, which is a question for the buyer and their advisers, not for the dealer to decide. The dealer should be aware that the bank may become involved, and keep its own records in a state it would be comfortable sharing.
The complaint ladder and response times
MIOSA tells consumers to raise a complaint first with the selling or servicing dealer, then to insist on a manufacturer's representative reviewing it, then to contact the manufacturer's customer care department, and only then to approach MIOSA, keeping records at each step. That means the dealer is the first rung, and how it handles the complaint at that stage shapes everything that follows.
Once a complaint reaches MIOSA, MIOSA says a dealer or other industry participant is given 10 days to respond. If a supplier still refuses to take part in conciliation after three attempts, the complainant is told within 22 days. A dealer that has kept a clear file can respond within that window; one that has to reconstruct events from memory will struggle.
Prescription does not pause for a complaint
There is a timing point that matters to both sides. MIOSA says that lodging a complaint with MIOSA or the National Consumer Commission does not interrupt prescription. It cites NCC v The Turbo Man CC, in which the National Consumer Tribunal held that it cannot entertain a matter referred to it more than three years after the cause of action.
For the dealer, this is a reason to keep records of every vehicle sale and every complaint for at least as long as a claim could run, and not to assume a dispute is over because it went quiet.
What to record while the dispute runs
Keep one file per disputed vehicle and add to it as things happen:
- The original sale documents: offer to purchase, invoice, delivery checklist and any disclosures about condition.
- The finance house's approval and payment advice.
- The buyer's complaint, in their words, with the date received.
- Every inspection, diagnostic report and job card for the vehicle since the sale.
- Every message to and from the buyer, the manufacturer and MIOSA.
- Any offer made, and the buyer's response.
Achekam's Document Centre is a folder-based store where a business uploads files or whole folders, previews, downloads, renames, moves, tags, archives and searches them. A new version of a file keeps the earlier ones, so a revised inspection report does not overwrite the first.
Recording a settlement
Most disputes end in a settlement: a repair at the dealer's cost, a partial refund, or occasionally the deal unwinding. Each needs to be recorded properly.
- A partial refund or price reduction. In Achekam a credit note is issued from the invoice it corrects, in full or for chosen lines, posted to the ledger, and can be downloaded as a PDF or e-mailed. There is no credit note without an invoice, so the settlement is always tied to the original sale. Any leftover credit is held for the customer.
- Money paid back. Customer payments are recorded against one invoice or spread across a customer's invoices. Administrators can refund or reverse a receipt, and any extra paid is held on the customer's account.
- The finance house's side. If the deal unwinds, what happens to the money the finance house paid the dealer depends on the dealer's own arrangement with that bank. Agree the figures with the bank in writing before recording anything, and keep that agreement in the file.
For how deposits and finance house payments are recorded on a normal sale, see deposits and finance house payments; for responding to a complaint that reaches the Ombudsman, read answering a Motor Industry Ombudsman complaint.
A dispute handled in writing, with the buyer kept informed and the instalments kept running, is far more likely to end in a settlement than in repossession.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
