Understanding the loans market
First National Bank (FNB) released a study revealing that many middle-income consumers spend up to 80% of their monthly income within five days of their salary clearing. The study further suggests that consumers earning between R180 000 and R500 000 per annum live roughly off 20% of their monthly salary for the balance of the month.
In addition, FNB’s management product head Ester Ochse said many consumers spend about 65% of their income servicing debt. “30% on unsecured credit, which are things like your personal loans, temporary loans, overdrafts, that type of thing, and then 35% on secured credit, which goes to your vehicle finance, and home loans as well,” Ester explained.
This means consumers are financially stretched. We’re looking for some easy-to-implement ideas to share with our customers to help change certain debt behaviour. In order to understand how you can reduce debt it’s important to understand the different types of credit lines that exist in the marketplace.
Different types of loans and what they are:
This loan requires you to put forward an asset as collateral – similar to our Cash Advance loan. If you bring in an item of value into any one of our stores, we will hold it for you until it is time to redeem it. Once you have paid the loan off plus interest, we will give your item back.
Unlike the secured loan that requires an asset as collateral, this loan type allows you to borrow cash based on your creditworthiness – in other words, your ability to repay the loan. For example, our payday loan allows you to borrow cash over 30 days and for the money to be debited at your next salary.
Credit cards are a good example of revolving loans. Revolving loans come with a credit limit that is set by the lender and decreases as and when used. This loan also allows you to borrow money over an unlimited period.
This type of loan allows you to pay a fixed amount for a set or agreed time. The interest rate, fees and repayment term are all included in your monthly installment. The most common installment loans are car repayments, home loans and personal loans.
The first step to managing your finances is knowing the types of loans available to you.
Cash Converters has been providing a quick and easy way for customers to get cash in hand. Instead of applying for a loan with a traditional money-lender, loan differently with a Cash Advance or PayDay loan.
Visit any one of our stores nationwide and chat to our staff about your loan needs.