Rising food costs and fuel expenses are driving many people towards credit solutions nowadays. The South African economy has endured some trying times of late. In fact, statistics are showing that more South Africans are relying on credit in the form of credit cards and personal loans, just to pay for basic needs and day-to-day living expenses.
Unfortunately a number that is rising at an equally rapid rate is that of individuals who are unable to pay for their short-term loans. More people are becoming over-indebted.
The amendment of the National Credit Act has created solutions for individuals who are struggling to repay their debts. In terms of the Act, consumers are able to apply for debt counselling in order to repair their compromised debt records or to prevent their debt spiralling out of control.
What is debt consolidation?
This is a solution that allows you to make a clean start if you have been struggling to keep up with debt repayments. It is a process that converts your multiple debts into a single, manageable monthly loan payment.
Debt consolidation may help you to improve your cash flow and may result in a lower monthly instalment.
Debt consolidation allows you to save on multiple fees, service charges and debit order charges on various loans you may have.
How do you consolidate debt?
You approach an NCR-registered lending institution that offers debt consolidation services.
A debt counsellor will assess your finances to determine whether you are over-indebted or not.
If you qualify for debt consolidation, your multiple loans will be combined into a single loan amount which you will be responsible for repaying over an agreed upon term.
Old Mutual has a dedicated debt consolidation product called the My Money Plan. This plan allows you to reduce your finance charges and provides an amount of up to R150 000 for debt consolidation purposes.
The loan is repayable over a period of 60 months maximum.