South Africans are still not coming to terms with their finances and how to better use financial instruments, this has landed them so deep in debt that most of them have no idea how to get out of it, forcing the most desperate to sell their cars.
When faced with this sort of crisis and let’s not underplay this, it can be a crisis. The first step you can and should take when you find yourself drowning in debt is to contact a debt counsellor to get a free credit report and find out what your options are.
Many South African’s do not seek out debt advice out of embarrassment, pride or they did not know these facilities existed, how to use them, find them or make contact with them, that’s, why we at ezDebt are constantly trying to reach out to South African, ‘s in need of our services.
Tough times ahead
The past five to ten years, rising food and petrol prices, a weakened rand and rising interest rates have already hit consumers’ pockets so hard that entering into a personal loan agreement has become a commonplace solution to making ends meet. Unfortunately, this has led to a crippling debt spiral as you’re only servicing debt by creating more debt instead of trying to get out of debt completely.
How badly in debt is the South African consumer?
A recent World Bank index has shown that SA is one of the most indebted countries in the world.According to the National Credit Regulator (NCR), South African consumers are R1.66 trillion in debt, owing an average of R274 000 to creditors
A large proportion of consumers’ debt comes in the form of mortgages, vehicle repayments, clothing accounts as well as secured and unsecured credit facilities.The NCR’s latest quarterly report shows that about 25 million people have active credit records. However, a staggering 10 million have impaired credit records.
The regulator also indicated that consumers who are over-indebted tend to miss repayments primarily because they underestimate the cost of missing payments.
Cars being sold to service debt at an alarming rate
The NCR raised the alarm over the rising number of consumers who pawn their motor vehicles in order to obtain loans. Nthupang Magolego, a senior legal adviser at the NCR, said although pawning of assets for loans is allowed under the National Credit Act (NCA), the regulator cautioned against consumers pawning their motor vehicles.
She said the risk was high for consumers to lose their vehicles to pawnbrokers if they are unable to repay the loans within the agreed time.“Pawning assets for loans should ideally be used for small amounts of loans, where small assets such as cell phones, laptops or similar assets are pawned,” advised Magolego.
While if you’re looking to pawn off larger items you’re in serious trouble and need professional assistance to get yourself on the path to becoming debt free.
How to protect my vehicle from debt
It’s difficult to remember how we got into debt in the first place and the reality is that it feels virtually impossible to get out of it and before things get too bad.
If you’re stuck in a debt trap you should follow these steps:
- Admit you have a problem with debt
- Confirm this by finding out your status: Get a credit report.
- Spend less than you earn.
- Look at how much your debts are costing you and make a plan to pay off the most expensive ones first.
- Don’t take out debt. Rather save to buy things and don’t use credit.
- Don’t only focus on your debt; instead try reducing your expenses such as your insurance, etc
- Speak to a debt counsellor about debt review
Manage your debt effectively
If you’re feeling overwhelmed by your current financial situation, feel free to contact us. To Speak to one our consultants about debt review contact us here.