In today’s world we have instant access to everything we want and need. News, social media, transport, accommodation even food delivery at the click of a button thanks to apps and the innovative functionality of smart phones. This also means that marketers of big companies, such as those offering debt, have easy access to potential clients. They use data collection and targeting to push products and services to clients. In any given day you receive hundreds of emails, SMS’s and social media ads trying to catch your eye.
Loans, Credit Cards, Cash Today!
We have figured out ways to ignore this marketing or mark it as spam, but sometimes the right advert comes at the right time and may cause you to bite. This is quite prevalent in the debt space. Messages and adverts for loans come in al shapes and sizes. “Apply for a R150,000 personal loan today!” or “Get Quick Cash Today, Instant Approval” are some of the messages that you may be exposed to. Some of these are legit but many are in fact scams. For someone that only has a few hundred Rand left at the end of the month, this might be their only lifeline. With no electricity or food left in the fridge, a loan is the only things that will get them through the month.
The South African Debt Situation Is Serious
It’s fair to say that many South African’s are addicted to debt. The fact that over 40% of credit active consumers in South Africa are in arrears on one or more account (World Bank Report) proves that consumers are taking out debt which they cannot repay. Consumers take loan after loan and use credit cards and store cards until all of these are maxed out until becoming blacklisted. Vantage Debt Management reports that consumers approaching them for help have monthly instalments that total 85%-100% of their monthly salaries. This doesn’t leave enough money for necessary living costs such as rent, groceries and transport costs.
Borrowing From Peter To Pay Paul
Over-indebted consumers often end up using new debt to pay off other debts. This is a dangerous spiral and can lead to legal action and even repossession of assets. Vantage advises consumers struggling with debt repayments to approach a debt counsellor for help. Debt counsellors will have a look at the consumers entire financial position. Using this information they can advise on a suitable debt solution and free advice. Over-Indebted consumers are most likely to qualify for debt counselling. Debt counselling is a process whereby the debt counsellor negotiates with credit providers. These negotiations aim to reduce monthly debt repayments and interest rates. The consumer receives legal protection and will now have one consolidated, affordable monthly payment.