Struggling with financial debt is something that all too many South Africans are aware of. Some 10-years after the National Credit Act was launched, somewhere in the region of 16,000 people per month seek information and help about dealing with finding themselves owing significant sums of money to others.
It somehow doesn’t seem right that when personal debt in SA is at an all-time high, one of the industries that has been flourishing is the debt distress industry. Like most things in life, getting debt advice costs money. It appears that there are always some people around who are prepared to profit from the pain and loss of others.
Debt counselling industry shrinking
The problem is though that recently, the number of debt counsellors is beginning to dwindle. Like it or not, this type of help with debt is still needed, so less help being available in the future is something we should be worried about.
Although it does seem morally wrong that people should profit from others’ debt, the industry has become less profitable.
The SA government regulates the fees that counselling agencies can charge. The effect is that fees have remained static since 2011 – great for those in need of counselling. In the meantime, inflation has been happening at an average of 6% per month.
So, while the fee freeze has been good in real terms for people needing advice, the people giving the advice are earning less in real terms less, and as a result, they are finding more lucrative employment elsewhere.
With more and more people in need of help with their debt and fewer advisors being available, with more leaving the industry on an ongoing basis, those in need of assistance may find it harder to get good advice.
Selecting the right loan solution
Not all debt problems require counselling though. It is mostly necessary where people are facing long term debt and need help with maybe consolidating that debt or perhaps getting bankruptcy advice.
For short term debt, or for getting hold of more money in order to take advantage of a great sale offer, a personal loan may well be the answer. There are several different types of personal loan, so it’s well worth finding out more about the products available and this this personal loans guide on the Wonga website is a good place to start.
Generally speaking, if you are considering taking out a loan, it is best to pay it back as soon as possible. This will prevent you from paying too much back in terms of loan interest. A pay-day loan might be a suitable option as these paid back in days rather than months or weeks.
But if you can/t afford to pay the loan back that quickly without endangering your money supply to buy essentials, you’ll need a different product. This is where personal loans that can be repaid over a period of a maximum of 6-months come into their own right.
Whatever you do, take your time and do your research thoroughly before choosing which type of loan suits you and your financial situation best.