Selling your car online? Know the risks

Selling your car online? Know the risks

So you want to sell your car privately to get a better price than you would if you went through a dealer, but how safe is it? Well, not very, alas.

Car sale
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Listen to Wendy on the topic below, or read the details under the podcast.

In fact one of the case studies in the Ombudsman for Short Term Insurance’s annual report for 2016 which was released on Tuesday is ample proof of that.

Here’s how it went: a Mr G advertised his car on a website and got a call from a potential buyer, Mr X.

They arranged to meet, and Mr X was supposed to pay a R5000 deposit and give Mr G the proof of payment.

Mr G got an SMS confirmation from Mr X’s bank confirming the deposit had been paid but the meeting was confirmed nevertheless, at a shopping mall, and the deal was that Mr X would provide proof of payment of the balance, and Mr G would then hand over the car and its documents.

Before the meeting at the shopping centre, Mr. G got another SMS apparently confirming that the outstanding amount had already been paid into his account. 

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Asked for more proof, he sent an email with a bank transaction form attached.

Mr G then went to the shopping centre on October 9 last year, where he was approached someone who claimed to be collecting the car on behalf of Mr X, who couldn't make it.

He tried to call Mr X’s bank to find out if the money had been transferred to his account but he was advised that only the accountholder could ask such a question. 

Why he didn’t call his own bank to find out if the money was there I have no idea.

Anyway, instead of walking away from the deal, he got a copy of that third party’s ID and handed the car and its keys over to him.

The next day he discovered the proof of payment was false and his ID number didn’t exist.

In claiming for the loss of the car with his insurer, Santam, Mr G said he was afraid for his and his wife’s safety at the time, because that third party was accompanied by another male and that he felt that if he did not give them the car, there might be “repercussions”. 

His claim was rejected on the basis that “theft by false pretences” was an exclusion in the policy and that Mr G had been made aware of that exclusion.

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It was apparent, Santam said, that he’d handed over the keys despite feeling suspicious and despite not having been able to find out for sure whether payment had been made.

So although the car was stolen, because he was strung along by a fraudster and willingly handed his keys over to him, he had no claim.

It’s no surprise, then, that fewer and fewer South Africans are willing to risk selling their cars privately via online classifieds - they risk losing not just their cars, but their lives at the hands of criminals posing as would-be buyers.

So, in order to ensure that private selling via classifieds survives as an alternative to the second hand car market, AutoTrader, South Africa’s largest online vehicle platform, has joined forces with Bosch service stations to come up with a secure solution they call Marketplace.

Sellers are vetted before being introduced to a potential buyer, then they meet at a Bosch outlet of their choice, where the seller’s car is technically inspected; a deal manager helps the two parties negotiate a fair price, and finance is arranged via AutoTrader’s finance partners. 

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That way, both and buyer and the seller are protected, because there are risks on both sides: the buyer runs the risk of landing up with a “lemon” or a stolen car that they will have to forfeit if recovered and the seller’s risk is even bigger - they can be defrauded or even killed for their car.

And private sales are not covered by the Consumer Protection Act making them essentially voetstoets - no comebacks.

The Marketplace isn’t free, of course. For the seller, a once-off inspection fee of R1 249 to have their car listed . If you’re buying from Marketplace, you’ll pay R3 899 for the facilitation and administration, and R1 649 for registration - so about R5500 in total.

And it can be paid upfront or included in the finance deal.

But whatever you do, if you’re buying or selling a car via online classifieds, learn from Mr G's experience - don’t go it alone, and check everything very, very carefully. It’s a very high risk option otherwise.

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