Personal loans increase over 70 percent in last 7 years
Personal loans have become a lifeline for more
and South Africans over the last seven years.
That is according to a debt solutions group which has been analysing the debt index for the second quarter of 2023.
Despite high-interest rates, debt councillors say inflation is the reason why more and more people are having to borrow to make ends meet. Benay Sager who is with Debt Busters says the size of loans taken out increased by 78% since 2016. 95% of consumers who applied for debt counselling in the second quarter had a personal loan.
He says financial stress also went up from 70% in 2022 to 78% this year. Money worries are affecting people at home and work. Sager says they have had a negative impact on people's health as well.
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"Consumers are really in the thick of things dealing with their debt. I think the most significant finding is that average interest rates continue to increase for the consumers even though there was a pause in terms of interest rate increase - what they feel is gone up.
The debt service burden has gone up significantly for consumers. On average, consumers need about two-thirds of their take-home pay (66 percent) to service the debt repayments before coming to debt counselling."
