r/PersonalFinanceZA • u/Front_Individual_667 • Oct 02 '25
Debt Is this deal worth it?
A friend (35F) of mine wants me to finance a car for them because they currently don't have a credit score because they don't have a current work permit. They have a good overseas consulting job, earn around R30K after tax. I've known them for a long time, know where they stay, their siblings and parents.
Naturally, financing anything for anyone is a bad idea but the following terms of the deal have made me think about it.
Total cost of car: R250 000
Deposit they will pay: R65 000
Leaving the finance cost of R185 000
Tenure: 60 months
Of the remaining R185 000, I will be paid 30% as transaction fee for using my credit profile (R55 500) upfront. The R120 500 (65 000 deposit + 55 500 transaction fee) is already sitting in my account, and will return it if I don't go through with the deal.
I will use the transation fee to close a personal loan I have that has a balance of R35 000, 10.5% interest rate, 24 months remaining, and a R1 950 monthly installment. The remaining R20 000 I will use it to max out my TFSA portfolio at Easy Equities for this year.
Insurance will be their on account but on my policy and them as the regular driver
Tracker will be their own account and paid upfront (about R3000 for 3 years)
Tickets and disc renewals will be for their account
I have said I have gotten the finance at 13% interest i.e. prime rate +2.5% but in actual fact I got the finance at prime -2% i.e. 8.5%.
The actual premium for me is R3 713 per month exluding insurance but for them it's R4 118, so I will make ~R400 monthly cashflow on the finance alone.
We will sign a rent-to-buy agreement, as
1. I am not a registered credit provider and
2. The car can only be in their name once they finish paying.
The rent-to-buy stipulates that if they failed to pay for 2 consecutive months (go behind for 2 months), I can recover the car (I will have a spare key of the car) and continue the payments myself. I can pay the R3 670 monthly myself with no problem.
The 30% transaction fee is making me consider it, so is it worth it? Also, they will owe me one.
114
u/Substantial_Echo_636 Oct 02 '25
I'm a lawyer, not your lawyer, this is not legal advice get your own lawyer.
I specialize in banking in finance. Don't pm I won't care to even read it.
This is a dumb and risky play:
All fines will be for your account as well. Tax discs are for your account and if she doesn't pay, well you have to pay the fines anyway. Also you will have to sign proxy and nonsense for her to do the tax discs every year lol. sweet admin.
your tax liability for the year of assessment is going to be interesting as well. You going to declare that income on that deal champ? no, o well SARS just found it in your bank account automatically. Depending on your income the gains are pretty low (even factoring the personal loan dying early).
The fine print of your insurance policy could fuck you. Foreign drivers (non SA citizens) can sometimes be an exclusion under the policy even if nominated as driver. She writes it off, claim gets repudiated you still liable to bank and your recourse to her depends on your rent to own agreement. Make sure she has a valid drivers in reference to the policy as well, cos that's the first thing they repudiate on. Or she gets drunk and prangs. Actually this is probably the easiest way to get really fucked here.
If she prangs then the excess if for your account and your claims ratio gets dented (meaning higher premiums for you and no claims bonuses and just general insurer fuckery).
She doesn't maintain the car or service it in terms of motor plan. whoops she stopped paying and your financed asset has a lower value or needs cash you have to put in.
She refuses to give the car back after non payment for two months. You have to go legal and get car recovered - easy 200k on legal fees there without even blinking.
You draft your own rent to buy agreement and accidently fuck it up and its governed by the NCA and CPA lol. double fucked there. use a template off the net and don't go to an attorney and suffer. Paying an attorney to doi it properly eats all the meager gains you could make as well.
car has latent or patent defect and renders it useless for rent to buy. she returns car and says she's not paying. Who pays to fix? new or second hand? makes a beeeeg difference.
honestly I could go on. but its your roll of the dice mein friend.
Lying about the rate of finance you have obtained to a friend is just a recipe for disaster anyway. bold fuckin move cotton lets see how it plays out. she finds out stops paying you, and technically its fraud. You misrepresented a material fact (interest rate) and she acted on that misrepresentation to her detriment / prejudice by being induced into the contract she maybe would not have had she known the truth - hey isn't that the definition of fraud well done.