Debt Consolidation South Africa

South Africa is a beautiful, historic country that is loved the world over, with renowned landmarks such as Table Mountain, Robben Island and Kruger National Park.

However, there are millions of consumers in South Africa that are deeply indebted. As a result, banks and credit providers introduced debt consolidation as a type of ‘debt solution‘.

Most borrowers in South Africa spend most of their salaries servicing debt. You get two types of debt. 1. Long-term, low-interest debt. Such as home loans, student loans and business loans – which are secured with assets. And then you get the more problematic short-term, high-interest unsecured debt. Such as credit cards, store cards and personal loans.

As Good as it Sounds?

As interest accumulates, it eats away at the disposable incomes of consumers across the country. And so, South African consumers soon find they cannot afford their debt payments. Subsequently, they turn to debt consolidation.

It involves a credit provider granting you a big loan, which you are supposed to use to settle all of your high-interest, unsecured debts. As follows, you should only be left with one credit provider and one account to pay off monthly.

As good as this sounds, there are a few things you should know about debt consolidation before committing yourself to something that may very well make your situation a lot worse.

10 Things to Know about Debt Consolidation in South Africa

Creates temptation to spend the loan, so you could end up doubling your debts.

You have to meet certain credit criteria to qualify.

The poorer your credit score, the higher the interest rate you’ll be charged.

You’ll only be offered a low interest rate, if you have a good credit score.

You’ll have to pay off your debt over a longer period of time – more expensive overall.

Can’t consolidate accounts that are in 2 months’ arrears or more.

The loan amount you will be offered will depend on your income, expenses and risk profile.

It’s not a ‘get-out-of-jail-free’ card or extra spending money.

It won’t help you curb your over-spending and bad credit behaviour.

It does not reduce your expenses – you have to foster better habits.

We suggest you send us your contact details instead and we’ll phone you back to tell you all about the much safer, far more advantageous debt solution we offer here at National Debt Advisors, namely debt counselling.