Jan 25, 2022

Majority Of South Africans Defaulting On Their Personal Loans

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South Africans are known for their poor savings record and taking on huge debt burdens.

FILE PHOTO: Covid-19 has resulted to many South Africans to default on their debt in the past year. PICTURE: Rocketclips

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JOHANNESBURG: The impact of lockdown has been ‘like adding fuel to a fire says National Debt Advisors’ Sebastien Alexanderson.

South Africans are known for their poor savings record and taking on huge debt burdens.

The lockdown necessitated by Covid-19 has been “like adding fuel to a fire” says Sebastien Alexanderson, CEO of debt counselling firm National Debt Advisors (NDA).

Between March and December 2020 the interruption of income due to lockdown negatively impacted the finances of 80% of households, according to NDA research.

Around 10% of the company’s clients skipped payments or made short payments on home loans and vehicles.

The latest Consumer Default Index (CDI) from Experian indicates that personal loans saw a deterioration while credit cards and retail store accounts have shown steady improvement.

“Less people tend to skip retail store payments because they still need to keep their accounts going, as many have resorted to buying necessities like food or school clothes on their credit cards or store accounts,” said Alexanderson.

“People are still working at a quarter of their income capacity. Businesses are struggling… More and more people started lapsing on their debts,” he said.

“It’s become a worldwide problem… Here in South Africa, where 75% of us who are credit-worthy are already over-indebted, now we have to find ways to start coming out of that debt,” Alexanderson cautioned.

“Everywhere in the world, we are all faced with that journey of trying to build ourselves as human beings and as families, and trying to navigate the treacherous road of the debt cycle, all the while trying to make sure we find those ingredients for happiness and success,” he added.

Up to 40% missed retail store payments, and nearly 60% skipped personal loan payments

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