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"The scam begins with advertisements posted by 'brokers' or bogus companies in trade magazines and classified sections of newspapers promising vehicle owners facilities to 'take over' their vehicle instalments," Sabric said in a statement.
The unsuspecting vehicle owner - often cash-strapped - would make contact with the advertiser and enter into a deal.
"The transaction proceeds as promised and the vehicle is handed over to the 'broker' or bogus company," Sabric said.
Contract not settled
What the unsuspecting vehicle owner does not know is that his vehicle finance contract with the bank was not really 'transferred' or settled.
"They are still liable to the bank," Sabric said.
"We call on all clients that have vehicle finance with the banks to first approach the bank concerned before entering into any transactions regarding the vehicle to avoid falling victim to this scam," said Sabric CEO, Kalyani Pillay.
"The risk of entering into third party transactions with vehicles still under finance agreement without the knowledge of your bank is that if anything goes wrong with that transaction, you will still be liable according to the terms of the agreement," she said.
Check with bank
Clients must ensure a settlement had been made with the bank before handing over the vehicle to a third party, even when concluding a deal with a legitimate institution.
"... It is possible that many clients fall victim to the scam because they still do not fully understand that a vehicle obtained under a hire purchase agreement remains the property of the bank until it is fully paid."
Pillay said these clients were in breach of their contracts with the banks by handing over their vehicles to third parties for whatever they believe their benefits would be.
People who purchased bank vehicles obtained through this scam also stood to lose any money they paid upfront to the 'broker' or bogus company, Pillay said.
