My fellow South Africa dwellers it looks like we are approaching a 5 year-peak in interest rate charges next month. What makes this particularly noteworthy (incase you were not bothered) is the fact that the repo rate may go up by 2% in one go.
To put things into perspective. If you bought a house for R500, 000 back in 2006 around July and the bank gave you an interest rate of 10.5% (i.e. the prime lending rate then), and you took the bond over 20years then you would have been paying the bank R4,991.90 per month.
So two years later, Today, you are paying the same bond but alas, the prime lending rate is 15% which means that you are paying R6,583.9. This is a whole R1,592.05 every month extra that you did not foresee. And petrol? food?
But wait for the punch-line! If things go as Tito Mboweni stated while talking to Bloomberg we are going to receive an early Youth day present of 2% hike. This means the repayments for the same bond will now be R7,334.00.
In English, this means in a month and a bit’s time you will be R750 poorer and R2342.1 from when you bought this house two years ago.
Picture by razzlefrazzle
People seem to be under the notion that “if I skip a payment I’m automatically in the dwang…”
No, you should not get blacklisted for paying late, depending on how late your payments came in and depending on your definition of blacklisting that is.
When you pay on time, late or skip a payment, your credit grantor will report this to a credit bureau.
Click here to continue reading ‘Can I get blacklisted for paying late?’
Most of us do not take the time to compare rates we are being offered by various credit grantors when applying for all sorts of credit, which is actually reckless of us.
When applying for credit what you should do is approach more than one (preferably 3) credit grantors and compare the various offerings to see which one ultimately costs you less in terms of repayments and total repayment. Yes it is time consuming but when you do the maths, you will realise it was worth it at the end.
Now go ahead and ask for a quotation… Actually you should DEMAND a quotation (since you should be given a quotation in a prescribed form (-¹nogal), setting out the principal debt, the proposed distribution of that amount, the interest rate and other credit costs, the total cost of the proposed agreement !)
See section 92 of the National Credit Act which is further detailed on the National Credit Regulations’ section 28. That’s if you are courageous enough and maybe you can help us decipher this wonderful piece of legislature!
Click here to continue reading ‘Shopping around for better interest rates, if you have the time and want a better deal that is’
In the past you may have experienced firsthand interest rate charges as high as 100%, or you may have heard friends tell you horrific stories. Some of you might have seen the story ran by Carte Blanche detailing how consumers where sometimes led into signing Micro Loan contracts instead of the normal Hire Purchase (Instalment Sale Agreements) all for a better profit at the poor consumer’s cost.
What has the National Credit Act done for us with regards to this subject?
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