Consumers have never been this thinly stretched before when it comes to their finances as they battle to afford the basics and pay their debt.
Despite being more optimistic about their finances, South African consumers are still battling with debt as personal loan interest rates reach their highest levels, while their income growth does not keep up with inflation, and they have to use unsecured credit to make up the shortfall.
He says 82% of people who apply for debt counselling have a personal loan and 53% a payday loan, at a time when unsecured interest rates are at 26.7%, close to the maximum of 29%.Other findings from the Debt Index show that compared to 2016, consumers who applied for debt counselling had: Unsustainably high levels of debt if they are top earners. Average unsecured debt levels were 22% higher than eight years ago but are lower than the same period last year. For people taking home R35 000 or more, unsecured debt levels were 52% higher. While only slightly higher than inflation growth, without meaningful salary increases, these consumers must supplement their income with unsecured credit.
The share of vehicle debt has increased in the last few years, indicating that more consumers with financed vehicles are seeking financial assistance.
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