South Africans lie to get car and home loans – and get away with it


The latest Annual Crime Statistics (Sabric) report from the South African Banking Risk Information Center shows a drastic increase in the number of fraudulent Vehicle Asset Finance (VAF) applications as well as a slight – but felt – increase in home loan fraud.

Sabric reviewed fraud-related information provided by major financial institutions such as Capitec, Bidvest, Absa, Discovery Bank, FNB, Standard Bank and others. It specifies that the statistics used cover the period from January 1 to December 1, 2021.

Criminals take it upon themselves to try their luck by getting their hands on large sums of money. Vehicle finance company Wesbank reported that the average value of cars financed in August this year was R337,252.

According to Sabric, 2021 saw a 53% increase in the number of VAF cases, compared to 13,095 occurrences in 2020. The potential value of losses resulting from these criminal activities is estimated at approximately R7.3 billion. in total.

In 2021, Gauteng and KwaZulu-Natal, at 38% and 24% respectively, accounted for more than half of reported fraudulent claims nationally.

Home loans, on the other hand, can run into the millions, as the national average purchase price of a home, according to Ooba, is R1,389,715.

Mortgage fraud claims saw a 1.6% increase in 2021, compared to the previous year, with 2,700 cases reported. Sabric added that this meant potential losses increased to a total of R3.4 billion.

Actual losses increased by almost half (47%) compared to the previous year, reaching a total of R445.6 million. 12% of reported fraudulent mortgage/housing loan applications were accepted last year, the group said.

He added that despite banks, in the majority of successful fraudulent claims, having some protection in the form of bonds and registration of deeds to properties, huge expenses are still incurred in legal fees and expulsion.

Gauteng, again, was a crime hotspot, with 64% of all cases ending in the economic hub, followed by Western Cape and KZN.

Amount of the loan

South Africans are taking on more debt despite the pinch of the rising cost of living. Data from DebtBusters revealed the following three expenses to make up the highest amount of debt:

The most recent debt index from DebtBusters for the second quarter of 2022 showed that the average unsecured loan granted was R41,100 while the average value of a secured loan was R206,000.

According to the group, the size of secured loans has increased by 28% over the past four years, while the size of secured loans has increased by a similar degree of 26%.

Increase in car debt

DebtBusters noted in August that vehicle and asset finance (VAF) would become increasingly difficult to repay and increase the amount of debt taken on by consumers.

“Automotive debt has increased over the past few years, indicating that more consumers with assets (vehicles in particular) are seeking financial assistance,” Sager said.

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