Repo rate up by 50 basis points

This increases the cost to service debt by R5 per R1000 per year.

Or 41.7 cents per month extra per R1000 debt.

For R100 000 debt you will be paying R41.70 extra on interest per month.
 
Unfortunatly it is time for the reserve bank to do this. Credit demand is definatly spiraling out of control just look at all the new cars on the roads
 
consumer spending in really through the roof, look at edgars cards and so forth. eventually they'll have to toss the black list because it will read like a census!
 
telkomsuig said:
Unfortunatly it is time for the reserve bank to do this. Credit demand is definatly spiraling out of control just look at all the new cars on the roads
Click to expand...

Agreed. This is also causing a great deal of pressure on the current account, which could have bad ramifications for the country if it continues.
 
telkomsuig said:
Unfortunatly it is time for the reserve bank to do this. Credit demand is definatly spiraling out of control just look at all the new cars on the roads
Click to expand...
daysleeper said:
consumer spending in really through the roof, look at edgars cards and so forth. eventually they'll have to toss the black list because it will read like a census!
Click to expand...
But is Government doing anything to curb this practice.
Clothing resellers are virtually like Banks now. Where is it going to end.
Government has pending legislation, but it is too late to stop the demand for credit and when it gets finally promulgated will it have the desired effect?
Many people live beyond their means, some because they chose to, but others just to survive from one month to another and personally I think the latter is the majority.

Institutions that loan money to people knowing full well that their clients are not entirely a good risk, should be penalised when those same clients cannot pay any more, by letting them carry the unpaid debt.
They are essentially no better than Loan Sharks?
Maybe sounds a bit extreme, but something along these lines will be necessary to curb credit.
For instance when you ask your Bank for a loan or overdraft they will ask for collateral and financial statements.
The latter to determine if you can service a loan and the former to cover the loan in case you cannot repay.

Are all these new Financial Institutions following the same criteria as the Banks when issuing credit?
Trevor Manuel was stating his concern recently about these non financial institutions.

Example of Credit Extortion for unwary low income earners.
One of my staff bought a stove and a fridge from a well known company.
What the staff person should have noticed is the fact that the interest rate was ridiculously high for a start and the Insurance levied came to virtually the same amount as the cost of the goods.
The Insurance on the goods was about R2800 on a loan of about R3000 for the two items.
Needless to say payments started to fall in arrears and one thing led to another and then this person imposing as some or other Klein Hofsake Spoordienste with a pink piece of paper, all official looking, appeared at the door to demand payment within 24 hours or the two items were going to be confiscated.
Now I know this is illegal as only a Court of Law can issue an Attachment Order and possession is nine tenths of the law.
It did have the desired effect of getting this staff member to come and tell me about the matter and I took over the payments, even advancing more money than what was necessary, squarring off the account in full.
>What was an eye opener for me was the ease of credit that was granted and the charges levied for interest and insurance.
Items that would have normally only cost about R3000 ended up more than R7000 in the end.
This is where the Government needs to play a role. Curbing all those "hidden" costs and help to make the Industry "clean" for the choice of better words.
 
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BTTB said:
Institutions that loan money to people knowing full well that their clients are not entirely a good risk, should be penalised when those same clients cannot pay any more, by letting them carry the unpaid debt.
They are essentially no better than Loan Sharks?
Maybe sounds a bit extreme, but something along these lines will be necessary to curb credit.
For instance when you ask your Bank for a loan or overdraft they will ask for collateral and financial statements.
The latter to determine if you can service a loan and the former to cover the loan in case you cannot repay.
Click to expand...

AFAIK this is one of the provisions of the new Credit Act. An affordability test will have to be done by the credit grantor for any form of credit - effectively a mini personal monthly income statement. If it is not done, or not done properly so as to demonstrate true affordability, the borrower will be able to get out of paying.
 
pip said:
AFAIK this is one of the provisions of the new Credit Act. An affordability test will have to be done by the credit grantor for any form of credit - effectively a mini personal monthly income statement. If it is not done, or not done properly so as to demonstrate true affordability, the borrower will be able to get out of paying.
Click to expand...
Ahh! :)
Thanks.

I thought as much.
Just wasn't sure how it was going to work in practice.
 
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