Affordability regulations, responsible lending practices, and early intervention in financially distressed accounts are set to become key enforcement priorities for the National Credit Regulator (NCR) as pressure mounts on consumers in a volatile economic environment.
During a panel discussion at the 2026 F&I Industry Virtual Summit on Tuesday, Bongani Gwexe, supervisor for statistics and research at the regulator, said affordability compliance remains one of the NCR’s central areas of focus in the automotive finance sector.
“I think the enforcement areas will be mainly to try and make sure everybody follows affordability regulations,” Gwexe said.
He also said the regulator is increasingly concerned about irregular practices within the debt counselling environment, particularly cases where consumers are allegedly placed under debt review without proper consent.
Gwexe said affordability failures do not only affect consumers, but can also damage brands, dealerships, and confidence in the wider vehicle finance market.
He recalled cases where repossessed vehicles damaged brand reputations because consumers blamed vehicle quality rather than affordability constraints.
“Meanwhile, they just couldn’t afford the repayments,” he said.
Pressure building inside household budgets
The discussion repeatedly returned to growing pressure on household finances, particularly as consumers stretch repayment terms to lower monthly instalments.
Annaline van der Poel, chief partnership officer at Debt Rescue, said the industry has seen a significant shift towards much longer repayment periods.
“Ten years ago, the average repayment term, for example, for a vehicle was 60 months,” she said. “Seeing a 72-month or 80- to 84-month term now, it’s very common.”
According to Van der Poel, the move towards longer repayment terms may improve affordability on paper, but it substantially increases the long-term cost of credit while exposing consumers to depreciation risk.
Both speakers emphasised that consumers often focus almost exclusively on achieving a lower monthly instalment, without fully appreciating the long-term cost implications of extended repayment terms or balloon structures.
Van der Poel said consumers do not always fully understand the impact of balloon payments and residual values at the end of finance agreements.
“If you have a balloon payment, can you afford to pay that balloon payment?” Van der Poel asked. “How does a balloon payment work? Do you understand the intricacies of it?”
She said many consumers focus primarily on the monthly instalment rather than the total cost of ownership, future maintenance costs, insurance obligations, and vehicle depreciation.
Affordability assessments under pressure
Van der Poel argued that affordability calculations in the vehicle finance sector still require deeper interrogation of consumers’ living costs and financial obligations.
She said dealerships and F&I managers should move beyond minimum compliance requirements by asking more detailed questions about household composition, dependants, and extended family responsibilities.
“How many people are in your household? How many people are you taking care of?” she said.
Those factors, she noted, materially affect transport, food, and living expenses, which in turn influence long-term affordability.
Van der Poel also encouraged lenders and dealers to conduct “stress tests” during affordability assessments to determine whether consumers would still cope if interest rates increased by one, two, or three percentage points.
Comprehensive insurance obligations should similarly be factored into affordability calculations upfront rather than addressed only after finance approval.
“Have you factored that in? Have you gotten quotes?” she asked. “Let’s put that into the budget as well.”
Gwexe said although affordability frameworks are generally well understood across the industry, consumers themselves often undermine the process by withholding information.
“What we found was that most were following regulations to the T,” he said. “But the challenge that we found was likely more on the side of the consumer, where consumers hide things.”
He urged consumers to disclose their full financial circumstances honestly during finance applications.
“You are the one who will be affected by this,” he said. “The day of getting a vehicle now and showing off. Three months down the line, you will be crying alone.”
Alternative data gaining traction
The panel also discussed the growing role of alternative data in expanding responsible access to credit, particularly for consumers operating outside traditional formal employment structures.
Gwexe said the NCR, together with the International Finance Corporation, has explored how alternative income sources could be incorporated into affordability assessments.
He pointed to informal traders, landlords, and gig-economy workers who may generate meaningful income but struggle to prove affordability through conventional payslips.
“How can alternative data be used to assist consumers in accessing credit?” Gwexe asked.
He used the example of consumers financing vehicles for income-generating purposes such as ride-hailing services, where additional informal income streams could potentially support affordability assessments if properly evidenced.
Gwexe also said financial institutions have an opportunity to play a greater educational role in helping informal-sector consumers better manage and account for cash flow.
Early warning signs of distress
Van der Poel said lenders already possess valuable behavioural indicators that could help to identify financial distress before accounts formally default.
She pointed to consumers repeatedly changing debit order dates, reversing debit orders, and making delayed manual payments as potential warning signs of underlying cash flow pressure.
“If you see a consumer who is starting to change, for example, his payment date quite frequently,” she said, lenders should investigate the reasons behind the behaviour.
According to Van der Poel, those patterns may indicate that consumers are prioritising other expenses ahead of vehicle repayments.
She said lenders should monitor broader trends within their collections books, particularly during periods of rising interest rates and economic stress, and proactively consider assistance or intervention strategies before defaults escalate.
Debt counselling and early intervention
Van der Poel described debt counselling as one of the National Credit Act’s most important consumer protection mechanisms for over-indebted borrowers.
She said earlier intervention remains critical because debt counsellors can assist consumers before legal enforcement action begins, but their options become significantly more limited once litigation has started.
“Taking the help and the action when you realise it and not wait until the legal action has been taken is such a critical part of finding that solution,” she said.
According to Van der Poel, credit providers should more actively guide financially distressed consumers towards debt counselling before repossession becomes unavoidable.
Repossession often still leaves consumers liable for shortfalls after vehicles are sold, she warned.
“There’s very likely going to be a shortfall, which they are still going to be liable for,” she said.
Reckless lending remains under scrutiny
Both speakers said reckless lending remains a major regulatory concern, although they agreed the industry has materially improved over the past decade.
Van der Poel said the NCA contains extensive protections and penalties aimed at preventing reckless credit extension.
“It’s not something that’s taken lightly,” she said.
The reputational and financial consequences for institutions found guilty of reckless lending have pushed lenders towards far stricter compliance processes, she added.
Gwexe agreed, saying the industry itself increasingly recognises the broader damage caused by irresponsible lending practices.
He said reckless lending damages not only individual consumers and families, but also confidence in the wider financial system.
Dealers urged to prioritise transparency
The discussion closed with a strong focus on transparency and consumer education at dealership level.
The panel repeatedly linked responsible lending practices not only to regulatory compliance, but also to long-term customer trust and dealership reputation.
Van der Poel said dealerships can improve outcomes by discussing realistic budgets upfront and presenting customers with multiple vehicle options within different pricing bands before finance applications are submitted.
Rather than focusing only on a single vehicle choice, she said dealerships should help consumers understand the alternatives available to them, what different vehicles offer, and how those options align with their budgets.
Rather than structuring deals purely around maximum affordability limits, Van der Poel encouraged dealerships to proactively reposition consumers towards alternative vehicles that better align with realistic long-term affordability.
“Understanding what your consumer wants already gives you a lot of a nice opportunity to prepare for the possibility that they could be declined,” she said.
According to Van der Poel, consumers are more likely to make sustainable financing decisions when they understand the trade-offs between affordability, features, long-term costs, and monthly repayments.
She added that consumers should receive clearer explanations around long-term ownership costs, including service plans, future maintenance expenses, and insurance obligations.
Gwexe similarly emphasised that openness and honesty from all parties remain essential to sustainable lending outcomes.
“The dealers and everybody else, they also need to be honest with the consumer and give them options,” he said.
