A Supreme Court of Appeal judgment has ruled that banks are legally liable for the second-hand vehicles they finance. (Photo: Istock) 
A ruling by the Supreme Court of Appeal (SCA) earlier this month squarely shifts some responsibility to banks financing second-hand vehicles, where there was previously little to none.
The sorry tale harks back to 2017 when Aletta van Niekerk purchased what turned out to be a defective vehicle and ended in December 2025 with a legal victory when the SCA handed down a judgment in favour of Van Niekerk, holding WesBank accountable for her legal costs. The SCA has ordered the vehicle financier to repay just over R170,000 for a defective vehicle that it financed.
Van Niekerk, a pensioner who lives in Mahikeng, purchased a second-hand 2012 Ford Ranger for her son Gerrie in 2017. After paying a R150,000 deposit and financing the balance via WesBank she discovered, after only four days, that there was an issue with the car’s gearbox. The vehicle was repaired at her expense, but overheated two months later.
On closer inspection, motoring expert and mechanic Sagie Moodley later found that when the dealership had done the repairs, the car had been fitted with a gearbox that was too small. The Van Niekerks subsequently decided to return the vehicle, cancel the payment agreement and sent letters to both WesBank and the car dealer through their attorney to claim a refund.
When the debit orders for the car finance instalments kept being subtracted from Gerrie’s account, his attorneys assisted him to reverse the debit orders until they ceased. Then during 2019 WesBank sued for the balance due on the credit agreement. In August 2022, the North West division of the High Court in Mahikeng handed down judgment in favour of WesBank with costs and dismissed Van Niekerk’s counterclaim, concluding that Van Niekerk had waived her right to cancel the agreement by initially returning the vehicle to the dealership to be repaired.
The Van Niekerks appealed and the matter landed in the Supreme Court of Appeal, which subsequently stated in its judgement that “the bank most certainly wore two hats when it entered into the agreement, namely, as that of supplier and that of credit provider”.
A wake-up call for banks
The court’s decision caused a major shift for the way cars would be financed, said expert consumer attorney Trudie Broekmann, who acted for Van Niekerk.
“The judgment has irrevocable and real groundbreaking changes that it brings into the vehicle finance landscape,” she said.
With the judgment, the court confirmed that when a bank financed a car, it became both the credit provider and the supplier to the consumer.
“That’s the thing that the Supreme Court of Appeal emphasised… They see that it’s an inescapable conclusion,” said Broekmann.
“Where a consumer would previously have returned the vehicle to the dealership if it turned out to be a lemon, if it’s financed, the financier now has to carry the can,” said Broekmann. “This has huge risk and commercial implications for banks.”
She added that if there was a hidden defect in a vehicle that a consumer purchased and they were subsequently involved in an accident, the bank would be liable for any harm caused.
“Every time they (the banks) retain ownership like they do with cars so that they can repossess the asset when you default, if you’re going to default as a credit consumer then the same principle applies,” said Broekmann. “The banks are not just liable to cancel and pay your money back… it also means that they are liable for any harm caused by that defective product or vehicle.”
What this means for you
The outcome of Van Niekerk’s appeal was a precedent that benefited all South African consumers and road users, said Broekmann. She added that it gave banks more reason to start policing car dealerships so that they knew what kind of vehicles they were financing. “It gives them the power to improve honesty in marketing,” said Broekmann. “And they can also say, I’m not going to finance any car you sell.”
Banks were likely to begin asking dealerships for full mechanics reports of vehicles before deciding to finance them, zooming in on quality assurance across the market for financed goods. For the motor industry, it would only improve the quality of the cars on South African roads. Broekmann said that the court’s decision would take the cars with the worst defects off the country’s roads. “I think this judgment is going to improve road safety for all South Africans,” she said.
Broekmann emphasised that if consumers had complaints about a car that was financed when they purchased it, they should go directly to the bank that did the financing.
“Because this is so new you may need a lawyer in your corner or to make use of the consumer adjudication bodies that are available to you,” said Broekmann. “Speak to a consumer lawyer if you need to, but definitely claim from the bank rather than wasting your time on the dealership.” DM