lender denies it is fleecing taxi owners 
06 October 2008

All charges built into total monthly repayments, including any fees or commissions, were fully disclosed in invoices supplied to customers with their contracts, said SA Taxi Finance (SATF) CEO Martin Bezuidenhout.  Customers could therefore make direct comparisons with the finance company’s competitors and usually found the total cost of credit slightly cheaper. This was because, unlike other banks, SATF didnt add maximum monthly service fee of R57 allowed by the National Credit Act to its credit agreements, or life and top-up insurance instalments, he said.

But this obscures the fact that SATF customers do not benefit from life or top-up cover. One taxi owner interviewed decided to take out extra life cover because he was worried his family would otherwise be left destitute in the event of his death.

Bezuidenhout said the flood of complaints the regulator had received was instigated by aggrieved third parties, including insurance brokers, losing commission to SATF. “We are able to offer the best possible rate without contravening any laws by disintermediating nonvalue-adding instruments,” said Bezuidenhout. Other banks generally hid dealer incentive commissions or agent fees in the interest rates they charged their customers, he said.

But SATF charges up to 14% above prime, which is generally more than other banks charge. At least one major bank active in the taxi finance market follows guidelines set by the Usury Act to cap its rates at 8,5% above prime.  Bezuidenhout rejected the suggestion that SATF lent recklessly to taxi operators. “Our business model revolves around treating the individual as an SMME,” said Bezuidenhout. “Revenue produced by the underlying asset is more relevant than a previous salary as an employee.”

Documentation seen by Business Day shows that one operator who earns R8300 a month was granted a vehicle loan of R236000 that attracts almost R197000 in interest and fees. His 60 monthly repayments, including insurance and car tracking, are R9500.

Stephan Hofstatter,  www.businessday.co.za