How does it work?
I will give a short explanation on the correct way this matter should be treated:
The dealer / supplier of the equipment will “sell” the goods / equipment to a client, who fills in a credit application form that the dealer will take to a Bank or Finance House. The dealer / supplier therefor applies for finance on behalf of the client. Bear in mind that a Rental Agreement falls just as much under the Credit Act as any other type of finance.
If the Bank / Finance House approves the application for credit, the client must provide all supporting documentation as is required by Law. This documentation includes the “FICA” (Financial Intellegence Centre Act) requirements like a copy of your ID (or ID’s of the directors / members of the business), Telkom / Electricity account (which indicates your physical address). Further to this the Bank / Finance House will ask you for proven information regarding your financial stability, income & so forth. This may include: latest audited financial statements, bank statement for the last 3 – 6 months, copies of the registration document of your business, resolutions, cancelled cheque to prove your bank account, etc. .
Should your application be approved, the dealer / supplier will invoice the Bank / Finance House who will buy it from the dealer / supplier. You as client will then receive a VAT invoice from the Bank / Finance House for your monthly rental payments until the last installment has been paid.
Banks are not “asset dealers”, but “money dealers”, so they will not be interested in keeping ownership of the goods, but normally make an arrangement with the dealer / supplier on a specific transaction to transfer ownership back to the dealer / supplier after expiry of the rental agreement, whether such ownership is being paid for at that stage or not. This is part of the agreement between the dealer / supplier and the Bank / Finance House and has nothing to do with the client. The Dealer / Supplier may then do with the goods as they see fit: “sell” it to the client or rent or sell it outrightly to anyone else.