5 reasons why you should avoid PERSONAL loans
To cover the cost-of-living crisis, more South Africans are turning to personal loans, despite them having the HIGHEST borrowing cost.
Worrying statistics show that more and more South Africans are turning to personal loans, despite the fact that they have the highest borrowing cost.
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Data from DebtBusters‘ quarterly review shows that the average size of personal loans for South Africans has increased by 78% compared to 2016. Equally, consumer spending power over the same period is down 38%.
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Likewise, middle-class South Africans (with an income of R35 000 pre month) have an alarming 189% debt-to-income ratio. What this means is 66% of people’s income is going towards paying off debt asset-linked debt like a house, car and credit cards.
PERSONAL LOANS
DebtBusters says 78% South Africans are feeling financial stress, according to its most recent survey. The same time last year this figure was 70%. “High inflation rates, increased fuel costs are the reason people are borrowing and turning to personal loans to make ends meet,” said Benay Sager, the head of DebtBusters.
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The average interest rate on a bond has increased from 8.3% in 2020 to 12.2% today. As a result, Sager says his company has seen a marked increase in South Africans needing debt counselling. This process eliminates personal loans and helps restructure asset-linked debt to protect assets against repossession.
DEBT COUNSELLING
Sager says debt counselling through DebtBusters is an effective way to protect against financial stress. With their expertise, unsecured debt (personal loans) can be secured to 90%, allowing people to pay back their most expensive debt quickest.
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Sager says DebtBusters has assisted South Africans pay back more the R450-million worth of debt since 2016.
If you’re struggling financially, get in touch with them at www.debtbusters.co.za to take advantage of their online debt-management tools or speak to a counsellor directly.