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Scary Stats

There are way more people in South Africa who have credit accounts than have jobs.

And their debt has steadily been increasing as interest rates and the price of food, electricity and petrol has gone up.

Many middle class South Africans are heavily indebted. Most credit users have to make use of 75% of their monthly income just towards their debt repayments. This effectively means they have to pay their credit instalment in order to carry on using that credit again to pay for their needs.

It is not uncommon for this segment of the credit market to have both a home loan (bond) and be paying off a car.

More Interest, More Problems!

Since November 2021 interest rates have been going up and up placing even more pressure on those with debts.

In order just to keep paying the bare minimum they have had to increase their monthly debt repayments.

People who have bonds of R1.5 million and vehicle finance of R300 000 have had to pay around R5500 extra (compared to Nov 2021) just to keep up with their payments. 

Which means they have had to earn about R9000 more (before tax) to keep up those payments or have had to cut R9000 out of their other spending just to keep on track.

While those with such expenses do earn higher salaries the sudden burst in repayment increases has hit them hard and squeezed most beyond the point where they can cope.

Most people’s income has not shot up by thousands and thousands of rand over the last 2 years.


People Aren't Qualifying for More Credit

People are desperately running around trying to get more credit in order to keep food on their plates and the lights on but increasingly credit providers are having to turn them away because they won’t be able to pay off more debt.

When you apply for credit, the credit provider has to check all your existing debts and your monthly need and calculate a bit of an emergency cushion and only if you can then afford to pay back what you are applying for can they give you the credit.

Recently banks and other registered credit providers have been turning people away even though they would love to offer more credit to more people.

Stats show that around 70% of all credit applications are being turned down because consumers can’t actually afford more debt.

‘around 70% of all credit applications are being turned down because consumers can’t actually afford more debt’

What is worrying is that these consumers may foolishly turn to unregistered loan shark instead of getting help with their existing debt through processes like debt review.

If you are dealing with severe debt stress, please talk to an NCR registered Debt Counsellor about how you can pay off your debts through debt review instead of chasing after more and more debt.