REK JOU CHEQUE: Get your budget in order now
Get your budget in order now Get your budget in order now
The 3-month payment holidays offered to consumers in good standing by their banks seemed like a literal lifesaver at the time, but that will soon be coming to an end.
Payment holidays have helped everyone, from those earning R5000 per month, to those earning R150 000 per month.
When your income is affected, it causes havoc on your finances, because your expenses are normally linked to what you earn.
As the lockdown continues, people are starting to panic, and will soon have to look at options like debt counselling and debt consolidation to help them through these turbulent times.
Research done at debt counselling firm, National Debt Advisors, shows that nearly 40% of consumers are making part-payments on their debts and nearly 80% of those asked have been cutting down on luxury spending.
What is concerning is that by the middle of May, nearly 50% of respondents said they would have a problem paying their rent at the end of May.
So overall, things are looking bleak, and that is why the information supplied by the NCR regarding emergency loans is so welcome.
I posed some questions to the National Credit Regulator on emergency loans and they have responded.
Who is allowed to apply for an emergency loan?
A consumer who is not under debt review can apply for an emergency loan, provided the consumer or the person dependent on the consumer or the person for whom the consumer is financially responsible is experiencing an emergency as described in the NCA, i.e. death, illness or medical condition, loss or interruption of income or destruction of property.
Is loss of income due to the lockdown sufficient reason to apply?
Yes, provided the reason is supported by a reasonable and credible documentary proof.
Are there any specifics around this emergency loan that consumers should be aware of?
Consumers can only apply for emergency loans, if they can submit reasonable and credible proof of the existence of the emergency.
How does this emergency loan affect the consumer and the banks’ rights with regard to reckless lending claims in the future?
Consumers are not protected by the reckless provisions of the NCA in respect of emergency loans, and similarly credit providers are not obliged to comply with the reckless provisions of the NCA.
Any further commentary from the NCR on this?
Consumers must continue to borrow wisely, and only apply for loans when it is absolutely necessary, and they must apply with registered credit providers.
Whether it is through debt counselling, debt consolidation, emergency loans, payment holidays or using your savings and investments - now is the time to get that budget and financial plan in order.
For even as we head into Level 3 of lockdown, times are going to be tough for a long time to come.