S Africans urged to borrow money responsibly

Monday, February 1, 2010

Pretoria - The National Credit Regulator (NCR) has urged consumers to borrow money responsibly and wisely.

The NCR said although interest rates have come down by 500 basis points since December 2008, the economy has still not recovered. The regulator said it continued to see a monthly average of 9 000 consumers applying for debt counseling.

"Consumers still need to be highly responsible and conservative when borrowing money," said Peter Setou, who is a senior manager of Education and Strategy at the regulator.

He said consumers should rather use the interest rate cuts as an opportunity to pay off debt quicker.

Before signing any agreement, Setou said consumers should have a detailed plan on how debt will be repaid.

"Otherwise, consumers could find themselves significantly worse off. Particular attention should be paid to 'no-deposit required' offers as these can prove to be highly expensive in the long term.

"A key technique to wise borrowing is to shop around and compare interest rates and other costs. Consumers should be fully aware of what total monthly payments will be as well as what additional charges such as insurance will be," he said.

The NCR has also urged consumers when borrowing money to make loans with the shortest terms possible.

Consumers should also make sure that they understand the terms and conditions of the credit agreement.