In a judgment delivered on 12 September 2025, the SCA found that the three credit providers did not contravene the National Credit Act (NCA) by financing amounts that included OTR items agreed to between a consumer and a motor dealer.

The ruling ends a multi-year legal battle between the NCR and major vehicle financiers and provides long-awaited clarity for both consumers and the motor industry.

The case arose after the NCR issued compliance notices to the finance companies, arguing that OTR fees, do not cover items such as registration, licensing, pre-delivery inspections, number plates and fuel, so they were not permissible charges under the NCA.

The regulator said these costs should not have been financed as part of the credit agreements. The finance companies successfully challenged those notices in the High Court in Pretoria, where a majority found that the inclusion of these fees in the purchase price did not breach the Act. The NCR then appealed to the SCA.

At the heart of the dispute was whether these OTR costs were “prohibited fees” or simply part of the vehicle’s purchase price. The SCA ruled that the latter was true: the finance houses were not charging consumers the OTR fees themselves but merely financing the full purchase price, which already included the OTR costs agreed to between the buyer and the dealer.

What this means for consumers and dealers

The SCA’s decision does not give dealers or finance companies unrestricted freedom to add charges. Instead, it confirms that OTR items can be financed only if they are transparently disclosed and form part of the agreed purchase price.

This means a dealer must specify the exact nature and cost of each OTR item, such as licence fees, delivery costs or additional accessories and must show the consumer both the cash price and the total cost if the consumer chooses to finance these items through credit. The consumer must also be given the choice of paying those fees upfront rather than finance them.

For consumers, this is significant. Financing seemingly small amounts like R4 000 in OTR fees can add thousands of rand in interest over the life of a car loan. The judgment makes clear that informed consent is essential: buyers must know what they are paying for, how much it costs, and how much more it will cost once interest is included.

For dealers, the ruling underscores that they must avoid “bundling” unrequested extras into the price without the customer’s approval. Optional accessories, extended warranties and similar add-ons can be included, but only if the consumer explicitly requests them and understands the cost involved.

Court’s reasoning and outcome:

Judge Makgoka, writing for the Court, stated that “the cost of the accessories and services supplied by the dealer to the consumer at the latter’s request is not a fee or charge prohibited by the NCA”. This statement was central to the decision. The Court stressed that the NCA’s lists of allowable fees do not limit what may form part of a vehicle’s purchase price, only what the credit provider itself may charge.

Because BMW, Volkswagen and Mercedes-Benz were merely financing the purchase price, not adding their own prohibited charges, they did not breach sections 100 to 102 of the Act.

Each party was ordered to pay its own legal costs, a sign of the Court’s recognition that the case raised important public-interest issues for both sides.

A clearer road ahead:

The ruling provides finality for the motor industry but places an equally strong emphasis on consumer protection. Credit providers may continue to finance on-the-road costs, but they must ensure that every fee is clearly identified, that the consumer’s consent is genuine and that the full financial impact is disclosed before any agreement is signed.

In practical terms, the SCA’s judgment means South Africans buying cars can still roll OTR costs into their finance packages, but they must do so with eyes wide open.

Sources:

Supreme Court of Appeal judgment: National Credit Regulator v National Consumer Tribunal and Others (ZASCA 132, 12 September 2025).

Polity.org.za — “SCA gives green light to vehicle lenders’ on-the-road fees under the NCA” (October 2025).

Moneyweb — “Credit Regulator fails to overturn OTR fees judgment” (15 September 2025).

IOL — “Court upholds car finance firms’ inclusion of on-the-road fees” (16 September 2025).

(Photo: Unsplash – Conny Schneider).