what you will learn in this webinar

Justin Harrison 00:01

We are live. We just need to wait a couple of minutes for everybody to get onto the stream. There's a little bit of a delay between our system here and YouTube. So, what happens is we, stream live and then, it goes onto YouTube; so, there's about a one-minute delay. So, we'll just start waiting till we see the viewing numbers go up and then and then Dawie, you can get cracking.

David Bester 00:26

Perfect. So, for you guys on the webinar, please introduce yourself, let us know where you're from. If this is the first time, you guys are joining us, if you've attended some of our previous webinars before, today, we've got George Simitopoulos joining us from Carfin. He's going to tell us a bit about the vehicle finance industry, and give us some tips when it comes to applying for vehicle finance. George has actually joined us on one of our podcasts before as well, on My Credit Status with Laura, that’s hosting the podcasts and it was a huge success. We had thousands of listeners and downloads on this podcast, so, we decided to invite George over for a webinar, so you guys can see the man behind the podcast as well and ask some questions if you've got any.

Justin Harrison 01:16

Alright, David, I think the streams are starting to come in. I know you've got a long list of questions for George. A lot of questions that I think everybody's asking at this moment in time.

David Bester 01:28

Yes, so let's start. George, I’ve obviously introduced you as well. I don't know if you want to add anything?

George Simitopoulos 01:35

No. People can Google me, these days. You can’t run away from Google.

Justin Harrison 01:44

“Dr Google”, as we call it.

George Simitopoulos 01:46

Dr Google, ja.

David Bester 01:48

Yes, so, for you guys don't know, George is from Carfin.co.za; he’s the Managing Director and Carfin, yes, I think you guys are probably one of the biggest car financing players out there in the industry. Am I right, George?

George Simitopoulos 02:02

On the independent space, yes. We are not, ‘a lender’, per se; we do not lend out our own money. We still leverage our loans and our loan book to the banks, commercial banks. But we are an intermediatory that does risk mitigation for the bank. So, your private-to-private sale, which the banks normally don't like doing; we facilitate you buying a car from your brother-in-law, those kinds of things; a caravan, the refinancing product that we basically brought that into the country in 2008. As you know, those days, when the slump hit, we were thinking of how we could assist people and we started the refinancing, where you effectively just restructure your current loan, to try and bring your instalment down. And that's something that we are now again promoting, because of the current state of affairs in the economy.

David Bester 03:08

So, that's actually an excellent thing. A lot of people don’t know this, but you can refinance your loans. We've talked about this on the home loan side of things. And especially now, with the interest rates being at a record low, people can obviously make use of that to, not only does it lower the payment, but they can refinance it, which means that they're obviously paying a lower amount. Something that we advocate a lot as well, is for people to increase their credit score first because you’ve got a better chance of getting it refinanced by the banks. So, can you tell us a little bit about that? And how would your credit score come into play, when it comes to refinancing? Should you improve your credit score first and only then apply for the refinance or what would you suggest there?

George Simitopoulos 03:57

A lot of people, once they do their credit score or credit health check, there is really no way, besides the fact, seeing that they made default or their score is lower than what the average should be, they would really not know if they could qualify or not. So, in our case, for example, we would sift those scores through and then, the ones that we think we can push through, we would then apply through our scoring models. The problem that we do see, is that people get into financial strain, and then start defaulting or paying late on there, let’s say, clothing accounts and that, which then starts scoring them negatively. And then, once they’re wanting to look at refinancing when they realise that they’re in trouble and they do not qualify. So, it's almost a proactive thing that you'd have to put into place. So, what I like about these podcasts is, we’re educating people on credit and credit statuses. People don't realise that their credit status is almost like a health status [inaudible]

Justin Harrison 05:20

Exactly. I think, George, you've hit it on the head. This is something that we've been trying to advocate for people for a long time. People try and put a band-aid on the problem, once the problem is already there. So, what we always say to people is, if you can foresee financial difficulty coming, let's say, for example, you had to take a pay cut or maybe there’s retrenchment and you've gone from a family that's earning a dual income down to single income; the very first thing you should do is, look at restructuring your finance deals and all your commitments so that you can at least service the monthly minimum commitment because those things have a very drastic impact on credit scores. In our system, we watch people's scores fluctuate and so, it's essential to 1) keep up with payment history payment – payment history is a very, very critical part of it and so, I think, what you’re saying is really important. It's all great to restructure your finance and look to restructure things but don't wait until the end of the road to do it. It sort of needs to be your first defence, rather than your last defence. Would you agree with it?

George Simitopoulos 06:25

100%. The sad thing is, a concept in brief, if I may explain the refinancing concept is, basically what you're doing, if you’re owing R100,000 on your vehicle and your original instalment was R4,000 at the time when you bought the car, at say, R200,000 or R250,000 and you owe R100,000; that means you still have to pay R4,000 every month for the remaining balance of the few months left of the agreement. What we do is, buy the car back from you and sell it back to you. So, on the capital side, we do not make any money; that is, whatever the outstanding balance is, the balance that will finance you, plus obviously, a small admin fee that we load onto that. What we essentially then again do is, renew the loan period to whatever you qualify for – 60-months, 72 or 48 - whatever you choose. That, by default, will then decrease your monthly instalments, right and that would make the affordability and the strain, we’d lessen the strain on your monthly cash flow. Now, we often see that, coming back to where we started, that by the time people get into trouble, they've already skipped a month or two on their instalment and they don't realise what a negative impact that will have because once you skip on an instalment and it shows on your credit record, you will not get finance; not even to refinance it; you will battle to get finance for at least the next 24 to 48 months in some cases. That's massive and that's just having to restructure or just tweak your finances and the health status or the credit status is so important for people to be in tune with where are they at and they don't realise how important is. It’s sad that sometimes if someone had gotten to me, say two months before that, they got to us, we could have helped them and saved them.

Justin Harrison 08:43

Ja, I mean, I think this is the other thing we've been saying to people; I think people are only now starting to realise the importance of not just taking a credit report once a year but you actually need to take your credit report and check your credit profile, at least, on a monthly basis, besides identity theft and all those issues that come into it. If, for example, some loan that you've got, hasn't recorded your payment correctly and you did, in fact, pay on time and that happens in a lot of cases and then all of a sudden, there's an adverse listing against you, and it may be bringing your credit score down. So, we always say to people, make sure you check your stuff every month. It's no different than checking your bank balance and I think, people really have to realise, it's as important as checking your bank balance.

George Simitopoulos 09:29

No, very much so. I'll give you a stupid example, something that I can personally relate to. We always advocate, especially for first-time buyers, to start building your credit record. Sadly, in this country, you cannot get credit if you don’t have credit. Please explain that to us – how do we start? And then, we advise them to start with, maybe a cell phone account or a clothing account, something that starts tracking with the credit bureaus [inaudible] So, I won’t mention the name of the group, but, I myself, not too credit active. However, I've had this clothing account for many years, and I will then predominantly buy once a year, X amount, maybe two or R3,000. And then, I will pay it over gradually. Why do I do that? I do that to increase or maintain my credit status. So, you don't, all of a sudden, become credit active and you want to buy a car and they say that we don't know who you are; we don’t know how you conduct your things. Now, in this specific case, this clothing account, so it's elementary for me to have spent a thousand or two; they don’t care, really about the amount – the credit bureaus – and you guys could comment more on that. It's more about how is my payment? How often do I pay? Do I pay on time and all those positive things – the history, right. So, they try and create your personality, your payback personality, your acumen. So, what happened in this specific company, is that I discontinued that - they had some club - you pay a membership fee, and then you get this club and then this club now, allows you to do certain things. I've got those benefits already, through my Discovery Medical Aid card; I don’t really need the club. I discontinued the fee on the club, two years ago. So, recently I paid up my account, I was due to go purchase again, however, I kept on getting accounts, and I reactivated the club fee. And I had not paid back for the last two or three months, so they could actually put me up as a default payer, on an account of forty or R50. So, it’s exactly what you’re alluding to, Justin, is people to have to check what their status is [inaudible] and that adverse information, that's incorrect.

Justin Harrison 12:03

Ja, and I think what people don't realise is, that your credit profile is not really linked to how much you earn. The things that specifically affect your credit score, and I mean, somebody who earns way less than another person could actually have a higher credit score. What they look at, in the credit score, and this is probably the most critical thing is your debt utilisation ratio. The two things that have the biggest impact on your credit score: one, is your credit utilisation ratio; and the second, is your payment history. So, what everybody wants to see is, if we give you a facility of R100,000, the ideal is that you never go over 30% of that. So, what lenders want to see is, that there are responsible borrowers in the market, and that's where they want to put their money, is with responsible borrowers. And so, what a lender wants to see is a very low debt utilisation ratio – under 30% of the facility. And then obviously, a continuous payment history. And it's amazing. I mean, the thing you're talking about now, I mean, we get this every single day, in comments coming back to us. And we always say, the reason you should look at your credit profile, every single month is because sometimes, companies don't upload the payment history. So, they may not upload the current payments for this month or next month and now, all of a sudden, on your record, it actually shows as an overdue payment. And that has a massive, massive impact on people's scores. And it's a problem, that's easily fixed.

David Bester 13:30

Yes. To give you an idea, like the two issues that Justin mentioned, right now, the repayment history and the utilisation ratio; those two issues alone, account for 70% of your total credit score calculation, which is absolutely massive. Now, if you go wrong in any of those two areas, then, as you said, George, you can forget about getting any kind of finance because it accounts for 70% of the total credit score calculation.

George Simitopoulos 13:57

Correct [inaudible] I think the people's access to vehicle finance and having to be able to buy a car, is a big thing. We do not have a solid public transport system; we have informal public transport systems, and often we see – I had a guy, yesterday, mail me – he’s getting a R6,900 car allowance but his credit score is negative, so he can't qualify. Effectively, he's going to lose that amount. We’re trying to assist him, where we're going to do a long-term rental deal with him, so, at least he has a vehicle. But that's the other concern; if he doesn't have a car, how does he get to work? It's quite a serious thing.

David Bester 14:54

It's very sad. People always wait till the very last minute before they start looking at their credit profiles. It's funny because they only start looking at it when they actually want to apply for something; they should be doing the complete opposite, you know? If you want to get a better interest rate - and you can correct me if I'm wrong here - you will get a better interest rate, if you've got a better credit score. So, if you've got an excellent credit score, you will get a better interest rate than the person with just an average credit score, is that right?

George Simitopoulos 15:23

No, I’m afraid so. I mean, if you have a good credit rate, all banks want to have the best clientele, they want to have the best people to borrow money to because that will obviously lessen their defaulters or repo rates. So, when you have a good credit score, you will actually, if you go to a dealership or come to somebody like ourselves, and we present to four or five banks, they will actually fight for your business. So, when we go and say, listen here, our clients aren't happy with the rate, we will pass it onto all the banks and they would actually come back and say, okay, we’re prepared to drop by a percent or half a percent. So, you’re 100% right in saying the better your credit score, the better the interest rate [inaudible]

David Bester 16:10

I'm glad you said that now. In the Home Loan webinar, we did last time, we mentioned that people, to rather go to bond originators because you get so much benefit from that. They compare all the rates for you, on your behalf and they've also got the contracts, which is basically the same as what you guys are doing, right? You said just now, if someone's not happy, you can compare it with the different banks and get them a better rate or a better financing deal.

George Simitopoulos 16:37

100%. So, with us, we do not make any money, if we do not conclude a deal for you. So, we are at risk, most of the time because we’re processing your application, we’re getting the documentation from you, we’re submitting it to the banks. And then, when the approval comes is when we start fighting for you, so…

David Bester 16:57

It's a big incentive for you guys.

George Simitopoulos 16:59

We get motivated to do a deal and we do not get a cent if we do not do a deal with you. So, [inaudible] the best rate that we can get.

Justin Harrison 17:09

I think, George, one of the misconceptions in the marketplace. And we've certainly seen it over the years, with any kind of origination, whether it be personal loan origination, whether it be vehicle finance origination, bond origination; there's a perception in the marketplace, that people should rather go directly to the banks because entities like yourselves, are making extra money and it's going to actually cost them more in the deal. But the truth of the matter is and we actually discussed this in a previous webinar, probably one of the most intelligent, sound things you can do, other than first making sure your credit profile is sorted before you start applying is, make sure you go with a reputable origination service because number one, they've got the relationships with the banks that you, as the individual consumer don't have. Secondly, they're going to shop around for deals, that you probably wouldn't get access to for a number of reasons. And, you can maybe talk about those. And the third, and this for me is really the critical thing, I don't think people realise the legwork that's involved, in terms of paperwork today. Even though a lot of things are electronic, there is a crapload of paperwork that needs to be processed for applications and for the average person to go to three or four banks and put in applications, is just an absolute nightmare. And so, I don't understand why anybody wouldn't do an origination deal because, at the end of the day, origination not only saves you money; it doesn't cost you anything extra. More importantly, you as the originators, are only going to get paid when the deal gets done, so the motivation from you guys is really, really high, to put your clients in the best possible deals, right?

George Simitopoulos 18:46

100%. And if you go to your bank, it's a one-horse race. You won’t know if you're getting the best deal. We've seen it in the car dealerships, that are putting in people's finance; not all of them would submit to all the banks. They might only be approved at one specific bank. So, you won’t know, whether you're getting the better deal because there's no comparison and people are naive and sometimes, they’re too excited just to get the deal. They’re blinded by the fact that did they fight for the best rate; did they get products that have value to them, not just add-ons, that bring no value because the dealer’s making more money on the add-on that he’s selling. Is he getting the right buy? From our side, we are so regulated, in terms of, the banking and FAIS and FSP regulations, that we have ever realised that, trying to upsell a rate - we've never done that in our business because of treating the customer fairly and sadly, there are some banks that do the opposite. They incentivise; some of them incentivise upselling the rates to give the dealer a better commission.

Justin Harrison 20:13

Well, there's a motor vehicle group in KZN, who's currently expanding their footprint nationally, and the very thing, you're just talking about is, in terms of, upselling rate; they've just been accused of it and it's all out in the press and whatnot. But I don't think people realise how prevalent this sort of thing is, on the dealership fraud. In fact, we've always had this strategy: you should buy your vehicle in one place and go and shop your finance elsewhere. It's usually, probably, not a good idea, to shop your finance at the same place, that's selling you the car because there's a lot of margin being made hidden incentives there. And so, I absolutely agree with what you've said, I think it's important that people go and shop for a deal outside of where they're getting their car. And usually, if you go through a reputable company, they're going to get you the best deal. And the problem is, a lot of the guys have often got to the point, in tough times, where they actually don't want to sell cars cash; they actually want to sell cars on finance because they're not making a lot of margin on the car itself; they're actually making the margin on the finance deal. So, it's critically important, that people understand that through the medium that we've got through the internet; a simple search through Google - go to Carfin.co.za, go and get a comparative quote. It doesn't cost you anything. Go and see what you qualify for. And probably, nine times out of 10, you're going to get a better deal, than what you would get, on the showroom floor.

George Simitopoulos 21:48

You know, in saying that also, these dealerships, when customers come to us and do the finance and we get them the approval and approval can take as quick as half an hour or it takes three days, it all depends if all the documentation is there. Once the dealer has now found out from the client that he is approved and we asked for the documentation to start facilitating the sale, then you must see how some of those dealers’ spark to try and steal the deal from us because they now know the client is eligible, right. We've had it recently, on Friday, we had a dealership that actually refused to sell the car to the client if they didn’t take the finance with him because the commissions were very high; it was a fantastic client; it was a big sale. And we already know, through our experience, when we ask for the offer to purchase and it gets delayed from the salesman, we know exactly what's happening. And the dealership, luckily, the client had given his details to get an approval but it was actually to our benefit because then the client realised that the dealership is charging him more and got him a higher interest rate than what we did [inaudible] So, they overplayed their hand that the client now, is not buying the car from that dealership.

David Bester 23:19

So, what can you do in that instance, if a dealership refuses to not want to sell a car to a client? Surely that's not legal, right?

George Simitopoulos 23:30

I can’t say, it's not legal. I think there's a bit of, in terms of - not ethical and also, surely, the bank can decide to or the dealership can decide, who they sell a car to or not. I don’t think it’s good business. So, we've had it in many cases; we've had it, where we've phoned dealerships that have tried to do this and said, listen here, you make your pound of flesh on the first gross - we call it, on the metal - and we make a little on the financing, right. You didn't go through the heartache and getting letters when it’s a business application; you've got financials, you’re got bank statements; it’s a bit more complex. You didn’t go through all of that and we must say that our clients have got a good rapport with, normally, our salespeople, so there's a bit of a bond, that they kind of stick to because they trust us now, right because we’ve engaged with them on a couple of occasions, to get them approved. So, we've said to dealerships, listen here, if you don't want to play ball, we have a network of dealerships that we work with, we will find a replacement vehicle, maybe even cheaper than what you are selling to these clients and in most cases, we've done that.

Justin Harrison 24:54

Now, George, something else I want to ask you about quickly and something that I always find, is an area of concern. When a vehicle gets sold from a dealership and the finance deal gets put on the table, there's more often than not, a lot of add-ons that get sold. It may be, extended warranties, scratch and dent covers – sometimes, people are paying up-front for their scratch and dent cover, these days. A lot of these things get added to the actual finance deal. Now, what is your advice to people, coming and purchasing cars? Should they try and put those products off the table and either pay for them cash or the accessories and things like sunroofs and radio upgrades and tyre upgrades? Are those things, that the client should factor into the finance deal? Or should they try and do those cash? What is usually your advice around that?

George Simitopoulos 25:45

So, products are a new thing. If you go get a cell phone contract, right, you're going to get cover for that cell phone, because if that cell phone falls, the chance is good, that it cracks. If you’ve got a cover, it might not crack. Okay? So, it all depends on the affordability. But I have now seen in the last few months that, the increase of, because we own our own warranty business, in conjunction with Regent Insurance, SA Warranties; we've created our own fund with them, right? Purely because of the fact that we do quite big volumes and we control the fund because we know what kind of quality stock goes in there; we make sure that the vehicles are mechanically checked prior to us financing deals, right. So, we know that we’re refinancing clean cars. We have seen an increase in warranty claims, over the last few months. Now, if you take a client that has an electrical problem, and the warranty covers eight or R10,000; this vehicle wouldn’t start without it being fixed. We've had clients phone us and thank us because they didn't have that R10,000 to fix that car. So, some of these products, you would think is just add-ons, nice-to-have, but they actually, can cover you and can assist you. They [inaudible] sometimes, but for example, shortfall cover, people that took life cover with retrenchment clauses in it, they have been helped a lot. People being retrenched; we often had people in the COVID times, in the last few months, phone us just to confirm that they've got that cover. And that assisted them in paying instalments. So, it all depends on whether your affordability is there. But if you’re buying a car, that's out of mechanical warranty, I would say, a second warranty or aftermarket warranty is definitely an essential, these days [inaudible]

Justin Harrison 28:01

That makes sense. I think any financial products, that are going to cover you, like credit shortfall, motor warranty; are essential. I think where probably the more pragmatic and practical advice would come in is, when you're starting to load a vehicle with accessories, first of all, know, that when you sell that vehicle, you're not going to get the value of those things back. And so maybe sometimes, depending on the vehicle that you're buying, it may work out better to buy a higher spec vehicle or, in some cases, buy a lower spec feel and be able to add the things that you want if you're going to finance it. But I find, often, people, especially like bakkies – I find bakkies is a big one - people are adding canopies, off-road or all-terrain tyres, bumpers, bull bars, tow hitches, LED bars; I mean, the list is endless. And I think, what is important is, that people need to be pragmatic about those things. Because, if you finance, let’s say, for example, over 72 months, or 60 months, or whatever it is; you're essentially paying on that specific item, and it's probably going to cost you double, over the lifespan of that vehicle.

George Simitopoulos 29:09 

100%. It all depends… Yes, David?

David Bester 29:14

No, go ahead. You can finish.

George Simitopoulos 29:16

You 100% right in saying that you ended up paying double for those things, you probably won't get it back at the time of trading. But then again, is do you want the nicer vehicle or not? And the market dictates whether it's an A to B vehicle or a single guy looking to trek around in a nice cabriolet, for example, or whatever the case.

Justin Harrison 29:40

Ja; ja.

David Bester 29:42

So, I wanted to ask you something. I remember in the podcast you did with Laura, you talked about balloon payments and why you wouldn't go for it and I was pretty amazed and I thought it was very good of you to be transparent with people. Usually, when you go to a dealer, they always smear that off on you because they want you to get your repayments lower, but they don't really explain the ramifications of that and why it may be such a bad deal. So, maybe you can just tell our viewers a bit about balloon payments, residuals and why you believe that it's not an option to go for.

George Simitopoulos 30:18

Okay, so, I'll explain to you, why dealers are keen on balloon payments, right? When you've got five-grand to spend, and you buy a car, and five grand is the instalment you might qualify for a loan of, say, 200,000. When you put a balloon on there, you could buy a car for 250,000 but still pay the 5-grand. So, you’re delaying the pain for later. Why is the dealer sometimes motivated to do that? He’d rather sell you the 250-grand car, than the 200-grand car. We, from a financing point of view, know that the flip side of that. We get people phoning us, saying, listen, I've received an email, that I need to pay a bank R80,000 by the end of next month because there's a balloon payment, where people didn't even know that they had one. So, they've signed an agreement, four years ago, and they didn’t know they had a balloon payment. So, we made a decision, from 2006 when we started, not to do balloon payments or residual payments, for that reason, because people will forget. You’ll never warn them about the balloon payment; four years ago, I didn’t know. And that's a big shock because you think you’ve paid off your car, but there’s an 80-grand, 100-grand outstanding. And then, in most cases, we refinance those things; we refinance those cars.

David Bester 31:46

Ja, I think it’s a lack of education. People don't really know what they buy into. It's like, vehicle finance; I bet you can ask almost anyone, and they won't be able to even tell you what their interest rates are.

George Simitopoulos 31:57

Correct. Once again, you ask anyone, at what rate they signed the agreement; forgetting about the interest rate, they wouldn't even know if they signed prime plus two or prime plus three.

Justin Harrison 32:11

It's amazing. I've seen these adverts lately, all over the internet; drive a Range Rover, for like, 15-grand a month. Somebody has to realise, at the end of that 70-month term, there's going to be some real pain in that deal. Mercedes Benz has also started doing it, Volvo has now also started it. And I think, the incentive is, to move as much product, as much metal as possible, exactly, as Georgia said. But for the consumer, the average consumer is not wise enough to understand; they’re just delaying the pain. The pain is coming and you don't get out of that commitment. And worse yet, is that in many cases, the vehicles that are being sold on these balloon payments, have such a high depreciation rate. Often when you get to the balloon payment, you're probably going to get out of the deal, with a little bit of a loss at the same time, and people don't really appreciate that.

George Simitopoulos 33:07

Yes, that's the case and that's the case with certain brands - I wouldn't say which brands but there are some brands that exactly that happens, you can never get out of their car. Historically, in the past, they would load that shortfall onto the next car. So, you would be almost forced to stay with that brand because you’d stay within the margin. And if you want to do that, you can never win, you can never win, you will always end up losing. Sorry, I'm just getting my charger here because I see my battery’s going [inaudible]

Justin Harrison 33:48

No problem. David, do you want to maybe shoot onto the remainder of your questions? We’re sitting at 33 minutes, so obviously, we've only got a couple of minutes left and I know that you've got some questions, and then maybe we can just address one or two of the user comments that have come through here.

David Bester 34:04

Yes, there's something else I wanted to ask. I think we've covered quite a few questions that I actually wanted to ask already. But let's say, you want to settle your account; you took finance, you want to sell your account, what kind of fees are involved with that?

George Simitopoulos 34:19

There should be no fees. No fees in settling your account. You phone up your bank, give them your account number and say you want to settle. They will work out on settlement, normally it's five or seven days valid and they'll also have a condition, whether it's within the period of the debit order running. So, they might say listen, after that debit going off, this will be outstanding or prior to that debit going off, this is what you'd have to settle but before this date. So, there is no cost to that. The other thing, in the past, we had a penalty clause, if you did early settlement but as you know, that law changed a few years ago. It just applies now within the first three months, if I'm not mistaken, of the agreement. But if you, in month 25, want to cancel your 60 months, then there's no penalty interest; the interest is calculated to the date of that settlement date, which they will send you on a quote.

David Bester 35:21

So that’s good for the consumer, actually?

George Simitopoulos 35:24

Very good for the consumer. The other thing also, that we tend to see if I can assist the people out there. A lot of people settle their documents, and then they never follow up on the NaTIS documents to be brought back from the bank. In some cases, the bank should contact you; in some cases, they won't; you'd have to ask for it. And then, when they want to sell the car, then they don't have the NaTIS documents, then that delays the process because they now, have to phone the bank. The bank needs to forward it to them, if the bank’s got it; they might have lost it, in the meantime. Then it has to be re-registered into the owner's name. It's a massive thing. So, the idea is, once you've settled your vehicle, contact your bank, within two or three days it will show in their account that it’s paid up, and then ask them for a copy of the NaTIS document and have the NaTIS changed. In the NaTIS document – it’s your registration document, when you finance it with the bank, that titleholder on the document would say, bank ABC, and the owner would be the person, right. So, once you get that document back, you then change the titleholder, to your name. So, you become both titleholder and owner.

Justin Harrison 36:41

Ja, that's a very good tip. I go across the border to Mozambique a lot and over the years, I've always, I've financed my vehicles predominantly with WesBank, and WesBank has got a great system. You go onto their system, you request your NaTIS documents, they come to you. And I've got one additional thing I would add to that, which I'll say in a second. But absolutely, get copies of your NaTIS documents. They usually send the forms with, that you can go to the traffic department and do the change of titleholder. So, that's something you should definitely do, as soon as possible. And then, the other thing, which is really critical: make sure you get a paid-up letter. Make sure you get a letter from the bank, stating that the account is paid up because if there is an administrative error or something wasn't listed correctly with the credit bureaus, you now have a paid-up letter from the bank, stating the vehicle is paid for and that basically then, you can go and dispute any adverse listings. And also, if you have any other problems, you have proof of ownership. So, there are two really, really critical things.

George Simitopoulos 37:44

So, just to add to that. A lot of people know they're going to settle the vehicle, right. Now, as I said earlier, in some cases, they want you to first get that debit run to go through. So, you want to settle it on the third of the month and there's a debit on the first. So, people know they want to pay it on the third, then what they do is, put a stop order on the first debit, but that debit has been calculated within that settlement amount. Now, they pay that amount, but they have not paid the debit order, then they think, the car is paid up and they leave it and they ignore the payment and they get adverse information and then actually get a negative scoring. So, when they go to buy a new car, they say but you are behind on payments, and it's one instalment and then it becomes a fight. So, people, that’s very important to get that paid-up letter because that's basically the sheet that you've paid up the car.

David Bester 38:38

Ja. So, let’s assume [inaudible] I apply for finance and I get a great deal with you guys; let's say, I get prime minus two and I want to fix this rate? Can I do this or can I not do this?

George Simitopoulos 38:52

Yes. So, we've been promoting the fact that, if you take - what is the interest rate? Our interest rate has come down by 3% - pre-COVID, right? What the banks are doing now is, they’re taking whatever rate you've been qualified for and, some banks will add a percent, some will add 1.5% but then fix it [inaudible] They just factor it in, right. They’re not going to say okay, you qualify because they know the interest rates are going to climb. So, if you've done a five-year agreement, they know, in five years, it’s going to climb. However, we say, listen, we still factor that 1,5% in. Because let's say, for example, you were a prime plus one client, you were at 11% at the beginning of the year, okay? You would now be at 8%. If you factor in that 1,5%, let's say, you're under 10%; you’re still scoring 1,5% if you had to refinance your car, at the same outstanding period, with the outstanding amount; toe-to-toe, there'll be a monthly saving. So, I actually encourage people to look at refinancing cars and fixing them, because it’s a no-brainer. You're going to have to pay the car until it’s paid up anyway but if you can save on it monthly, you’re saving monthly on interest. People don't realise, how much the interest accumulates. So, that's a suggestion I would make to people. We, even ourselves, our own fleet and one of our other businesses, we have four bakkies. We've just recently refinanced it and fixed it because it's a no-brainer; it's an administrative thing, moving paper around and you're saving on the monthly. In some cases, those differences are like five or R600 a month saving, which almost pays my insurance premium on those bakkies.

David Bester 40:56

No, exactly. It’s free money.

George Simitopoulos 40:59

It’s free money. It’s just manipulating the low-interest rate, at this stage. Sadly, I don't really see it coming down, much more. Maybe a quarter percent by the end of the year and I think then, the curve will hopefully start turning and start climbing.

Justin Harrison 41:17

Ja, George, if we’re completely honest, David and I often talk about the cycles of things, be it property, be it interest rates. Everything is very cycle-based and usually - I don't want to scare people - but usually, if you look at the historic records, what comes directly after a period of a new low, is usually a new high. And so, there's a very, very large chance, if we go on history, that interest rates could actually, at some point, skyrocket. I mean, I don't want to put the fear of God into people, but if we go back to 1998, 1999, we're talking about historical highs of 27, 28%, and I'm hoping we never return there but I think, people need to be cognizant of the fact that, we probably are at the lowest we're going to go, maybe we've got a little bit more room but it’s not going to be much more. And so, it just made sense, like you said, to refinance your deals. Get yourselves into a position where you fix your rates at the lowest rate possible because there are highs coming, whether we like it or not, the rate is going to go up at some point.

George Simitopoulos 42:28

And the nice thing with refinancing, when we load the deals, there's normally a month buffer before you pay your next instalment. Which, in some cases, assists people; just that one-month breather that they’ve got.

Justin Harrison 42:44

It’s a bit like a payment holiday. For sure.

George Simitopoulos 42:47

It’s a bit like a payment holiday. We tend to see a lot of that in January – January blues - when people are paying off their December holidays. We see a big spike in the refinancing product, however, now, now with COVID, having happened, people are under strain, ever since. So, refinancing seems to be a big product that’s selling at the moment. And then, there's also a lot of downgrading. I think earlier before we went live, we were talking about sales of vehicles and funnily enough, vehicle sales have not gone up. Like we said earlier, was the more heavy-heated cars, the R1 million cars, that seemed to be stimulated, which we also mentioned, could be because of this COVID epidemic. People were making money off there, PPE suppliers, guys that were making sanitisers and stuff. But we were hoping for a downgrade of vehicles. So, you were driving Fortuner and you can't really afford it anymore and you downgrade now too, let’s say, a Toyota Avanza, for example, if you’re needing to cart kids around. We thought that market would be stimulated but it doesn’t seem to have happened. I don’t know if there’s a delay in the economy but I think, people are also trying to hang on to what they've got, in terms of vehicles, in the hope that the market will turn and will get back to the norm. That's where we’re at, at this stage. The market is not predictive at all.

Justin Harrison 44:41

Ja, George, we’ve seen a similar thing in the stock market. I mean, we follow the stock market, very closely as well and there's a lot of non-logical stuff happening out in the marketplace. And I think, a lot of it is sentiment-driven, I mean, we’re obviously in a very unprecedented time. And then I think, you rightfully hit the nail on the head, there is definitely a delay. I think something that’s going to catch up with people, probably sooner rather than later, now that we’re, sort of, heading towards the tail-end of this thing, is the payment holidays. Payment holidays are coming to an end and things are going to get real, for a lot of people, very quickly. So, I think certainly, you guys have got a great product at people's disposal, in terms of the refinancing. And then also, I think this is just the advice that our grandparents gave us and our parents gave us, that we never really listened to, I think, people need to stop living on the edge of what is available to them, in terms of financing. Financing is a very important tool to get you on the road, to get you to work, to give you a house to live in but at the end of the day, you need to leave breathing room in there and you need to build up savings and you need to build up that emergency fund because if you're on the edge, all the time, it's probably going to hit you the hardest when things turn.

George Simitopoulos 46:00

Very much so. And I think businesses that I know, that have gone under, and the businesses that have survived, are the ones that have had some resources; they had a bit of saving, they had access to credit because they weren’t overindebted. No matter who you are, how strong your business is, or how big it is, and that seems to be across the board. We've seen businesses that are applying now for finance with us that, in 2019 there were huge profits, even February 2020 documents, huge profits but then, monthly since then, they’ve crashed. The banks are also uncertain. They’re all changed their scoring cards; they’re wanting to go for that vanilla, clear-cut guy, that's been employed for 15 years at the same company, earning his money and his credit is maybe 50% of his salary. Those guys are few and far between like you just said, Justin. People, South Africans, tend to live on the edge and it comes back to a thing that I've always said: in schools, we need to start educating our kids about money.

Justin Harrison 47:19

You are right on it. In fact, Dawie and I have a separate business, which we started teaching people financial education because obviously, the one thing we've noticed, running this credit reporting platform, is just how little people actually understand about money and the monetary system. I mean, people understand doing work and getting paid for it, but people don't understand all the little things, in terms of, how to manipulate the system, how to use a system, how to not get overindebted. So, I absolutely agree with you. Financial education is something that should be taught, from the primary school level already. And I think, we’re entering an era now, where people are really going to understand that your credit profile is something that’s super important; it's as important as your bank account. So, these are the things that we’re passionate about and we’re constantly talking about it because we have thousands of consumers, every single month, coming through our platform and we see the problems and just with a little bit of direction, a little bit of advice, their lives could be completely, completely different. I also think there's this thing that's being pushed on people, in terms of, their thinking in that, you have to earn more, the whole time. Our focus is on, earn more, earn more, getting the things that you want, to have the lifestyle that you want but often, the solution in front of you is actually to reduce your expenses, to live comfortably within your means. And I think access to finance is an incredibly useful tool. But the thing is, most people shouldn't be accessing finance until they've really got their money under control. And I think, this is what the credit scoring system and the credit reporting platforms are doing. It’s basically making people take account of what they're doing financially because that stuff is on your record; it's a criminal record. Once you do something wrong, it's going to stick there for a long period of time, before you rehabilitate yourself. And people really need to be rehabilitated, financially and be educated, to make the right decision. So, I'm really glad, there's a company like you guys out there because, in my humble opinion, from what I've seen, the vehicle purchasing space is a very emotional space, probably even more so, than buying a home. It has a lot to do with practicality, but it also has a lot to do with people's emotions around the image and trying to buy the best that they can afford. And sometimes, trying to buy the best that you can afford, is not necessarily the best decision. And if we can steer people towards more practical solutions, I think, ultimately, the consumer wins.

George Simitopoulos 49:48

Ja, something interesting. A while ago, maybe about two or three years ago, a took a dataset of clients, applying for vehicle finance on a specific vehicle model or make, right, and a certain age group. And we picked up that almost like 70% or 80% of those guys buying those specific cars, were renting their apartments or flats or houses [inaudible].

Justin Harrison 50:20

Ja, so, to all BMW drivers out there… because that usually is the case. You’re hitting a note that Dawie and I are super passionate about because, the data tell a story right, but the backstory is, there's a lot of emotion at play and people really need to get a grip of that emotional stuff, when they're making these purchases. Everybody wants to drive a new car, everybody wants to drive something that’s lekker but at the end of the day, you have to really consider the long-term implications. Whatever you’re committing to, most of the time, you’re committing, five or six years; for a lot of people, that is longer than their relationships last. So, really take this stuff seriously. Sit down, when you enter into a deal; try and remove the emotion out of it, try and approach things practically. And, I'm sure, George, that’s probably something that, a crowd like you guys will do is, sit down and really bring about some practical knowledge to the deal-making because often, when you're at a dealership, it's all red ribbons and go, go, go, right?

George Simitopoulos 51:26

Yes. In cases where clients, say, for example, have applied for a vehicle and the vehicle’s been sold. Only when we try and assist in finding a vehicle for them through our network, then only, do we ask them as to what’s the need of the car, what are they looking at. In some cases, they would be buying a specific brand, but with R200k so they can drive this specific brand. But then, we explain to them, like, do you know what the repercussions are if the gearbox goes on a car like that? We ask them the question, if the engine has to go on the car and it’s R80k right, have you got the R80k to pay for it? No? So, the warranty is important. Why would you want to look at that, if you could rather do this? Sadly, the education then, kind of, starts, because we want to end up doing a deal but we want to have client retention, right. So, we try and advise them, especially first-time buyers, as to what kind of vehicle to buy that we’ve seen in our experience because, as I say, we own the business; we know that some cars, some brands, some models have certain flaws and what it costs. And realistically, if I look at the application form and I know that you are earning X amount of money and your finance is young, I know that in most cases, you don't have the money to pay, if something goes wrong with that car. On a dealership floor, obviously, it’s all rar, rar; the dealer wants to make his money, the salesman wants to make his money. He's not necessarily motivated to give in. If the guy qualifies for the car and that’s what the guy wants, then let’s give it to him; it’s not always the best thing. But to come back to the education part, I think, it's a very important thing to bring into – maybe there’s a gap in the market for us to start educating people more aggressively into this - because the repercussions are, at the age of 23 or 24, if you bought a car incorrectly, it could take you 10-years to get out of the debt of that vehicle. By the time that you’re paid it up and want to sell it, by the time you want to trade it in, there’s a shortfall of 40 or 50-grand and you never run away from it. It gets loaded into the next vehicle. And then, that becomes maybe a 100-grand headache after three or four years. That's why I say, you never get away from it. A stupid mistake you make in the early times of your life can end up costing you later on as well, without a doubt.

Justin Harrison 54:12

Well, Dawie and I do this regularly, with a group of individuals that we’re actually mentoring through the project which is called Global Money Academy. And through Global Money Academy, we've been mentoring individuals in terms of their personal finances, and one of the biggest things we see is that people don't actually understand what they have and what they don't have. So, we've been teaching people how to calculate their net worth, understanding that it's what you have versus what you owe is what you have left, is your net worth. Most people are walking around having no idea what their net worth is, yet, those same people, are going out and applying for vehicle finance of five, 600,000 at a time and that to me is seriously scary. For me, it's not really shining a light on the individuals but it's rather shining a light on the entire system, that has really not educated people about money. We’re told to budget but nobody knows why they're budgeting. People think about their budget so that you spend less than you earn; that's only part of the reason. The other big part of it is, to make sure that you ultimately increase your net worth; by the time you head into retirement, that you're actually worth something. And like you just pointed out, people entering into bad deals, be it a car that you’re purchasing, be it a house that you’re purchasing, those are things that are going to take most people, a lifetime, in terms of their working career, to get out of that sort of kak.

George Simitopoulos 55:35

Let me give you a trick and I’m going to give your viewers and listeners a bit of a trick. Certain cars lose value quicker than other cars, within models, as well. Say, car brand A, there are certain models within that car brand A, that will lose more than any others, right. So, here’s a little trick, I'll tell you guys to apply. You go and look on the internet, little portals, cars.co.za, AutoTrader, wherever and you see a car for R600k as you said. So, you know, it’s 600-grand, you know that's the model and you know how many kms it’s got, right. Then, you phone a company like, We Buy Cars or phone another dealership and say listen here, I've got this model, this amount of kms car that I want to trade in; what will you offer me? And then you see, how much you lose when you drive out with that car. If they offer you 500-grand; you know you’re minus 400G’s.

Justin Harrison 56:49

I love it. That is a solid, solid tip. That is pure gold right there.

David Bester 56:58

I bank with FNB and on FNB, something you get with the app as well is, you can load your vehicle on there then you can see the depreciation rate of your vehicle. If people start doing their investments like that, I bet they would never do their investments. Yet, we still buy cars, knowing that the thing’s going to go to probably zero within months. It’s very scary when you start looking at that graph.

George Simitopoulos 57:23

A car is not an investment. The people that make money on cars are car dealers; that’s their business. They know how to buy; they know how to sell; they know how to fix the vehicle; that’s their business. You don't think you're going to buy a car and make money out of it, so, you have to determine the depreciation or the loss of the vehicle. Are you happy with having the luxury and paying that amount? And once you make peace with that, then you understand what I mean. But when you're buying a brand and there's one specific brand; it’s a fantastic vehicle brand, right. When you drive out with that car, you're losing 20% immediately. And a year later, you might lose another 10% and another. By the time you want to trade it in, you still have two years on your agreement, your car is worth 50% of the value. [inaudible] Now, you have to think twice now, whether you're going to sell it or trade it in. So, make that decision on day one, before you buy it. It’s unfortunate and these days, cars aren’t cheap; a car is almost the price of a flat. So, Uber and those kinds of things, coming into the market, the world stats have shown a decrease in new car sales because of this. People say they’d rather Uber than buy our car now and it depreciates and I take the loss in a year, or two- or three years’ time.

Justin Harrison 59:00

Dawie, if you don’t mind me asking a closing question before we go into the comments and it's very much on the point you’re making now, George. Would you recommend somebody rents a car, a long-term rental versus financing? Which is the better deal and which deal works best, for which kind of customer?

George Simitopoulos 59:21

You want me to answer that?

Justin Harrison 59:22

Yes, please.

George Simitopoulos 59:25

There’s certain rent-to-own your model, or rental models are going to come out. We are working on one now as well, that we worked on prior to COVID because we were of the opinion that [inaudible] would take strain anyway, in the next two or three years. To come back to you, if it's priced right, the fact that you’re basically leasing a car and it’s covering everything right, the engine. I mean, you take the keys and you give it back when you’re done; that model, depending on what you're using the car for, is a fantastic model. We are not used to that kind of market in South Africa. The Americans are the bosses of that. And you have to think now twice, why is one of the strongest economies in the world going with a model like that and we’re not trying something like that? So, to get back to you, there’s a place for the application of the vehicle. So, if you’re using it to drive from A to B, or are you using it as a rep, or are you using it for your wife, just taking it into the garage and out to the supermarket and back; they’ll all have different places in terms of the financial modelling, but overall, the rental model, I think, is something that we have to look at more aggressively. We have mentioned this to one of the big commercial banks, that's got a big presence in the asset-based finance, and they actually showed some keen interest to put some capital into our model, meaning that they’ve, kind of, identified that those traditional ways of financing are going to change because of the credit statuses of some of the South African people. It’s more a risk mitigation exercise than anything else. It’s certainly something you’ll see more of in the next few years. There are guys who have been in the game for a long but they – with all due respect to them - I think, they exploit the people that are desperate and who can’t get finance. These guys are getting returns of like 25, 26%; they’re ultimately caning the consumer out there. But then again also, if you haven’t looked after your credit health, you can’t complain; you can’t complain; you’d have to pay what’s out there.

Justin Harrison 62:02

Absolutely. Dawie, do you want to just quickly maybe address a couple of the user questions and comments and then we'll close off. This has been a fantastic webinar, George. I really want to thank you; your time is invaluable to our viewers and I hope we can get you back, one day because other than a home, a car is probably the next biggest purchase that people are going to make, so I think it's really, really critical info.

George Simitopoulos 62:26

Well, there's an argument – they say, a wedding ring is normally the most expensive thing you buy

Justin Harrison 62:31

I can attest to that. Twice.

George Simitopoulos 62:39

Well done.

David Bester 62:42

George, do you have another five minutes to answer a few questions?

George Simitopoulos 62:47

Ja, no worries.

David Bester 62:49

Okay. “Hi, gentlemen. My vehicle is financed at a fixed rate. Can I refinance my car to take advantage of the lower interest rate?”

George Simitopoulos 62:57

No, you can refinance whether it’s fixed or you could finance, if your vehicle, is still within the 10-year period. So, if it’s a 2010 and younger, then you could still refinance, and obviously, another nice thing about refinancing and coming through Carfin; there's no cost to you, to get a quote from us. So, if you want to explore, and consider it, it's worth giving it a try and see if the numbers work out for you.

Justin Harrison 63:31

Ja, it costs you nothing except to go to carfin.co.za; fill in the details there and other than a couple of minutes of your time, you might be saving yourself an absolute fortune every month.

David Bester 63:42

Yes, you've definitely got nothing to lose but only to gain there. “I was charged delivery of R4,500, though I collected my car, only noticed after some time. Do I have a recourse?”

I’m going to say the Ombud because that's definitely not ethical. If you cannot sort out the issue with the dealership themselves, I'm sure, if you threaten them that you're going to be going to a higher entity, then I’m sure they will settle… [inaudible]

Justin Harrison 64:11

Dawie, I just want to add one point and I think George will back this up: often people assume that the delivery fee is actually the car being delivered to you, that is incorrect. The delivery fee includes things like having your number plates allocated to you, having the number plates printed and put on your call. Sometimes, part of the delivery fee may be something like having your seats scotch guarded. So, I would just recommend you go and actually have a look, what was involved in the actual delivery invoice. More often than not, when they refer to a delivery charge, it's not specific to actually the delivery of the vehicle; it's the things that need to be done in order to hand over.

George Simitopoulos 64:51

Yes, that’s 100% correct. The “delivery charge” – that wording – shouldn’t be in there. Effectively, getting the vehicle ready, it should actually be called, an administrative fee. We often get it, in our case also, and unfortunately, the contracts that the banks have got, have got this term in it; we can’t just alter their terms and their wordings. So, they’ve got the delivery in there and you’re 100% correct. In some cases, they will give you a tank of petrol, which could be 1,200 bucks; it’s cleaning the vehicle, valeting it, getting it ready for you [inaudible]

David Bester 65:35

That thing is pretty expensive – a proper valet.

George Simitopoulos 65:38

Ja, the R4,500 to, in some cases, R7,500, seems to be the norm in the industry but…

Justin Harrison 65:48

Ja, someone has just commented here and said that, in their deal, it was called “on the road fees”. So, I think, slowly, some institutions are moving away from the wording of “delivery fee” to “on the road fees”; I have seen that come up in a few deals that I've done. So, my advice to this user is just, specifically go back to the invoice, find out what you were charged for specifically and if you actually got the value out of it, great; if not, then obviously, approach the dealership and discuss it directly with them.

David Bester 66:20

Shall I take one last question? [inaudible]

George Simitopoulos 66:23

Sorry, Dave, getting back to the previous question. For the clients: check your invoice or your offer to purchases prior to doing the deal, and also signing an agreement. It would be very difficult for you to actually try and fight it after the fact. The reality with these asset-based finance banks, those contracts are so binding. And also, to pay credit to them, they follow the laws as prescribed by Acts, in terms of, disclosures and that. The chances are that you will not get a reversal in on a fee like that. We’re all big people, we’re all adults here; when you sign an agreement, and you've signed an amount, whether it's right or wrong, you're binding to that. So, that comes back to the fact, that people are so excited, they don't want to look at what interest rate they’re being charged, they don’t look at what charges they’re being charged. They just see that red ribbon and the bottle of champagne. So, take it seriously, because you're married to that car for five years or six years, under contract and take it seriously. I think the allude comes back to, Justin, what you were saying earlier, people need to be in check with their credit status and where they’re at, to know that if you buy this thing, take it a bit more serious. And use companies like us or yourselves to bounce things off and ask questions; there are enough forums out there, enough companies prepared to help.

David Bester 67:56

That’s excellent advice. If you don't understand anything, rather ask questions before signing contracts, because, as you said, you’re stuck with that contract for about four or five years.

George Simitopoulos 68:07

We've seen it; remember, we see it first-hand, hey. I mean, we get an invoice from that dealership. And then, we look at the breakup, because we submit those figures to the banks and then, we see those kinds of figures. We'll phone the client – but what are they [inaudible]

David Bester 68:24

I can imagine, that must be pretty scary.

George Simitopoulos 68:27

Ja, we phone the client and tell them, this is ridiculous. You know, everyone can make their money; money is not a swear word; profit’s not a swear word. But there’s a limit, like 15-grand “on the road”; that’s crazy.

Justin Harrison 68:46

Ja. Alright, so guys, thank you so much; Dawie, thanks so much for getting George on the webinar with us. George, thanks again so much for being with us. For everybody watching, there will be a replay of this webinar; the replay will be sent out to our email list. You can also access it on our website: mycreditstatus.co.za. You can go and replay this and watch it and pick up some of the tips; there are some real, absolute little nuggets dropped on this webinar. So, please do go back and watch it again. If you are interested in financing a new vehicle, if you're interested in refinancing; go to carfin.co.za - the banner is up on the screen. Alternatively, you can phone the number that's on the screen and you'll get through to George’s salespeople. And rest assured, that you will not be paying any additional costs. This is a service where, basically, George and his team, only make money if they are able to actually get you a suitable deal and you take the deal, so there's no commitment on your part. And we also encourage you to go to mycreditstatus.co.za. Make sure that you are a subscriber, it's like 59 bucks a month; you get your credit report every single month plus a whole educational suite of tools. David and I spent three years building the video library of content, teaching people how to improve their scores, how to basically go about structuring their credit profile, and if you have no credit profile, we've got tips there on how you can basically start building your credit profile. And please, if you’ve got questions, during the week, between our webinars, we’re back in two weeks again; we do have a Facebook group. If you're a subscriber, you can join the Facebook group, there's a couple of thousand people on there, all day, every day, asking questions, answering questions; there's a whole host of information available to you. So, there's absolutely no reason to be in the dark anymore. Please, if you're looking for vehicle finance, give carfin.co.za a try and absolutely, make sure you're a paid member of mycreditstatus.co.za. It’s less than two cups of coffee a month and you're going to be getting your credit profile; it's worth every single penny. So, guys thank you so much for your time and we'll catch up with you again in two weeks’ time.

George Simitopoulos 70:57

Thank you. Cheers.

David Bester 70:58

Cheers.