The Credit Association of South Africa has warned that multiple small credit commitments, rather than one large loan, are pushing many consumers into financial distress.
The association says that the rising cost of living is worsening household finances.
It has urged consumers to borrow only what they can comfortably.
CEO Leonie Van Pletzen says, “Honesty is very important because the affordability assessment is one of the strongest consumer protection actions that is available to the consumer. But it goes to both sides. So the consumer must really be honest about what they can afford and what they can actually pay. And the credit provider must make sure that they do a proper affordability check, an NCA affordability check, where they can actually confirm the income and expenses.”
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