Picture this: You're at the dealership, eyes on that shiny new SUV. 

The salesperson runs through the numbers – deposit, monthly payments, and then those sneaky "On the Road" (OTR) fees. A quick inspection, license plates, a tank of fuel – it all adds up. 

But can your lender roll these into your loan without breaking the law? 

Until recently, that question had courts and regulators in a spin. Now, South Africa's Supreme Court of Appeal (SCA) has slammed on the brakes for some practices and floored the accelerator for others. In a landmark ruling on 12 September 2025, the SCA said yes to financing OTR fees – but only if lenders play fair with full transparency.

This decision, in *National Credit Regulator v National Consumer Tribunal and Others* (case 667/2023), ends years of legal gridlock. It stems from showdowns involving big names like Volkswagen Financial Services, BMW Financial Services, and Mercedes-Benz Financial Services. 

At stake? Whether bundling OTR fees into your car loan violates the National Credit Act (NCA), South Africa's consumer protection shield for credit deals.

The Long, Bumpy Journey to Court

It starts at the showroom. When you finance a car, the lender buys it from the dealer and resells it to you via an instalment sale agreement – basically, a credit contract under the NCA. The "principal debt" (what you owe upfront) covers the car's price, minus your deposit or trade-in, plus extras like OTR fees. These aren't fixed; they might include a pre-delivery check, roadworthy cert, registration, or even that first fill-up.

Trouble brewed when the National Credit Regulator (NCR) cracked down. They argued OTR fees were "prohibited charges" – not listed in the NCA's allowed categories for instalment sales (sections 100, 101, and 102). The NCR fired off compliance notices, banning the practice.

The lenders fought back at the National Consumer Tribunal (NCT), sparking a flurry of conflicting rulings. Cases piled up, got bundled, and landed in the High Court. There, a majority sided with the lenders: They weren't "charging" the fees; they were just financing a deal already struck between you and the dealer. But a minority judge backed the NCR, warning that slipping OTR fees into loans dodged the Act's strict rules.

Enter the SCA – the final word. Their verdict? A nuanced green light, with guardrails to protect drivers like you.

Red Light: The 'Closed List' of No-Gos

First, the bad news for shady add-ons. The NCA's section 102(1) spells out exactly what fees lenders can tack onto the principal debt in instalment sales. It's a tight, "closed list":

• Initiation fee
• Extended warranty costs
• Delivery, installation, and initial fuelling
• Taxes, licences, or registration fees
• Credit insurance premiums

No wiggle room. The SCA hammered this home: The phrase "any of the following items" followed by that bullet-proof list shows lawmakers meant business. No catch-all clause means nothing else sneaks in. Why? To shield consumers from hidden traps. As the Court put it, these rules guard against lenders padding bills with unregulated extras.

Think of it like a menu: You can order from the listed specials, but don't invent your own. OTR fees mimicking these – say, a disguised "delivery charge" – are out. Lenders can't rebrand them as "admin fees" or "service charges" to slip past.

Green Light: What's Fair Game in the Principal Debt

Now, the good part. The SCA ruled the NCA doesn't micromanage *every* cost in the principal debt. Section 102 targets "fees or charges" – not the broader "costs" that naturally tag along with buying a car.

The Act defines principal debt as the "deferred amount" plus section 102 items. "Deferred amount" isn't spelled out, but in car terms, it's more than sticker price. It covers the full package: vehicle cost plus reasonable extras like optional alloy wheels, a sat-nav system, maintenance plans, tyre warranties, or roadside assistance.

The key? It's about substance, not labels. Courts will scrutinise each charge: Does it beef up the purchase price, or mimic the closed list? If it's a genuine part of the deal – like that pre-delivery inspection ensuring your ride is road-ready – it's financeable. OTR fees often fit here, as they're tied to getting the car from lot to your driveway.

In short: Lenders can finance OTRs if they're vehicle-related and not doublespeaking the banned list. This clears the fog, letting the industry rev up without constant regulatory pit stops.

Orange Light: Shine a Spotlight on the Costs

Victory for lenders came with a caution. The SCA tossed the NCR's notices but flagged a big red flag: OTR opacity. Financing even tiny fees over 60 months, with compound interest, balloons costs. A R2,000 OTR bundle could morph into R3,500 owed – profit for lenders, pain for you.

To keep things above board, the Court mandated three transparency rules for all future deals:

1. Itemise everything: List each OTR component separately – what it is, what it costs. No lumping into a vague "OTR total".

2. Choice is yours: Ask outright if you want to pay cash for these extras or finance them.

3. Show the maths: Reveal the cash price versus the financed total (fees plus interest). Arm you with numbers to decide.

These aren't optional; they're baked into the NCA's consumer-first ethos. Dealers and lenders must tweak forms, scripts, and systems – a team effort from showroom floor to boardroom.

Hitting the Gas: What It Means for You and the Industry

This ruling is a roadmap for smoother sails. It confirms OTR fees can join the principal debt if they're legit purchase boosters, not section 102 clones. But the disclosure demands? They're a win for everyday buyers, forcing honesty in a market rife with fine print.

For lenders: Time to audit agreements and train staff. Partner with dealers to embed these rules – or risk NCR heat down the line.

For consumers: Knowledge is power. Next time you're signing, demand that breakdown. Crunch the numbers: Financing OTRs at 15% interest? It might sting more than paying upfront. Shop around; compare cash vs. credit totals. And remember, the NCA's got your back – report dodgy deals to the NCR.

In a credit landscape still scarred by over-indebtedness, this SCA steer promotes fair play. It's not just legal clarity; it's a nudge toward smarter, saver motoring. Buckle up – the road ahead looks a little less potholed.

Written by Armand Swart, Partner at Werksmans Attorneys