Consumer debt first aid: Understanding unsecured loans

Unsecured lending is a controversial topic in South Africa. It sits in a very uncomfortable place where there is clearly both demand and need for it, but at the same time it has caused some serious social problems.

According to data from the National Credit Regulator unsecured lenders last years embarked on a lending spree in the months before caps to interest rates and fees came into effect.

In the six months after government issued proposed caps to charges on loans, unsecured credit ballooned by almost 30%.

Reana Steyn, the Deputy Credit Ombud, explains how this all works.

On the one hand there are unregistered lenders.

Those we call loan sharks...and we do not have stats for that because we don't know who they are.

Reana Steyn, the Deputy Credit Ombud

Then there is the unsecured market where statistics are available.

Unsecured lending refers to all the personal loans, the microloans, that are granted to consumers by our regulated credit providers. And who provide the statistics of those loans to the National Credit Regulator (NCR).

Reana Steyn, the Deputy Credit Ombud

That's where we saw this huge jump. In the unsecured lending.

Reana Steyn, the Deputy Credit Ombud

Steyn says there were regulations in place and these lenders had to comply with the Act as it existed.

It did have prohibitions against reckless lending. They did have checks and balances in place. Maybe not as strict as they could have been, but they still had to comply with all of those rules of the NCA when they lent to consumers. So how it came about that so much more was lent out...is a bit of a mystery.

Reana Steyn, the Deputy Credit Ombud

South Africans are drowning in debt. This according to the latest quarterly reports released by the National Credit Regulator (NCR)

Ten million of the 24 million credit active South Africans are in arrears or struggling to pay their monthly debt repayments, when it comes to personal debt.

Listerners called in with a myriad of questions for the deputy Ombud, and she provided invaluable information and advice.

If you are drowning in debt and need to understand what your options are, please contact: creditombud,org.za ombud@creditombud.org.za Text 'help' to 44786

Listen to the full conversation below:

Read More
The chilling tale of Marikana told through song

The chilling tale of Marikana told through song

'Marikana - The Musical' Aubrey Sekhabi's adaptation of a novel by journos entitled “We are going to kill each other today".

An expert guide on 'hotwifing' and 'cuckolding' in the bedroom

An expert guide on 'hotwifing' and 'cuckolding' in the bedroom

Clinical sexologist Dr Eve shares insights into sexual fetishes and how partners negotiate them in their bedroom and relationship.

The Naked Scientist reveals how birds are able to find their way around

The Naked Scientist reveals how birds are able to find their way around

Every week The Naked Scientist offers listeners the opportunity to probe his brain on anything weird and quirky.

Jay Naidoo: Organised communities have the power to create change

Jay Naidoo: Organised communities have the power to create change

Social activist Jay Naidoo has written a book which explores the power of human connection and social activism.

Local bee farming company Native Nosi creating a buzz with raw honey

Local bee farming company Native Nosi creating a buzz with raw honey

Native Nosi owner Mokgadi Mabela says over 50% of honey sold in SA is imported and she wants to change the business landscape.

How do we ensure the safety of women in South Africa?

How do we ensure the safety of women in South Africa?

Women's Legal Centre and POWA discuss ways to ensuring the legal system stops failing women of South Africa.

Popular articles
An expert guide on 'hotwifing' and 'cuckolding' in the bedroom

An expert guide on 'hotwifing' and 'cuckolding' in the bedroom

Clinical sexologist Dr Eve shares insights into sexual fetishes and how partners negotiate them in their bedroom and relationship.

[Watch] John Maytham shuts down victim shamer on air

[Watch] John Maytham shuts down victim shamer on air

A caller wanted to know what the alleged victim had done in order for Grace Mugabe to assault her.

WC Health Dept responds to Diphtheria outbreak

WC Health Dept responds to Diphtheria outbreak

Dr John Sonnenberg voiced his concern that communication in the Helderberg area following the outbreak could have happened sooner.

Cape officials to harvest 500 million litres of new water a day

Cape officials to harvest 500 million litres of new water a day

Mayor of Cape Town speaks to CapeTalk's Kieno Kammies about plans to provide more water amidst the ongoing drought.

Khoza sacking shows Zuma camp on warpath – analyst

Khoza sacking shows Zuma camp on warpath – analyst

Karima Brown says developments in Parliament over the past 24 hours shows the ANC caucus is imploding.

"I bumped into Anoj Singh and Eskom's Prish Govender at the Hyde Park Hotel"

"I bumped into Anoj Singh and Eskom's Prish Govender at the Hyde Park Hotel"

Sikhonathi Mantshantsha says surely as Anoj Singh is on suspension, he should not be talking to Eskom employees.

Journos walk out of Bathabile Dlamini's briefing after 2 hour wait

Journos walk out of Bathabile Dlamini's briefing after 2 hour wait

EWN's Gia Nicolaides says journalists walked out of the media briefing on social grants after waiting for hours for her to arrive.

Grace Mugabe used normal passport and can't enjoy diplomatic immunity

Grace Mugabe used normal passport and can't enjoy diplomatic immunity

Shadow Minister of International Relations says Mugabe's case should not be debated any further as she can't enjoy any privileges.