Sounding a warning over personal loans this festive season, there’s a upward trend of South Africans using borrowed money for shortfalls in ‘Januworry’. Worse still, some are using loans to indulge in lavish parties and personal purchases like cars this holiday, despite the fact they carry the highest borrowing cost of all.

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According to the DebtBusters’ quarterly review, the average size of personal loans for South Africans has increased to 78% today compared to 2016. Equally, consumer spending power over the same period is down 38%.


Warning over personal loans
There are always debt relief programmes. Image: iStock

Likewise, middle-class South Africans (with an income of R35 000 pre month) have an alarming 189% debt-to-income ratio. What this means is 66% of South African’s income is going towards paying off asset-linked debt like a house, car and credit cards.

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After a difficult year, DebtBusters says 78% South Africans are feeling financial stress, according to a recent survey. At the same time last year this figure was 8% lower at 70%. “Inflation, high cost of living and bad financial planning are the reasons people turn to personal loans to make ends meet,” said Benay Sager from DebtBusters.


Warning over personal loans
Cash in hand is always better than debt. Photo: Pixabay.com

Despite 2023’s cooling of rate hikes, the average interest rate on a bond is still 12.2%. This represents a marked increased from 8.3% back in 2020. As a result, Sager has raised a warning over personal loans, and suggests debt counselling for those in need. This process restructures debt to protect your assets against repossession.

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Sager says debt counselling through DebtBusters is an effective way to protect against financial stress. With their expertise, unsecured personal loans can be secured to 90%, allowing you to pay back the most expensive debt quickest and avoid any loss of assets.


Warning over personal loans
You don’t have to be in debt in 2024. Image: Supplied

DebtBusters has assisted South Africans pay back more the R450-million worth of debt since 2016. If you’re struggling financially, get in touch with them HERE to utilise their online debt-management tools and take control of your life in 2024.

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What do you think of this warning over personal loans this festive season? Be sure to share your thoughts with our audience in the comments section below. And don’t forget to follow us @TheSANews on X and The South African on Facebook for the latest updates.



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