TAKING STOCK
The adverse effect of unsecured lending
Such lending, as offered by Capitec, creates millions of borrowers trapped into very expensive loans
06 March 2020 - 05:05
There is more than R200bn in unsecured term loans outstanding in SA and more than R450bn if one includes credit cards, overdrafts and retail store cards. Independent analysts estimate that more than two-thirds of unsecured credit is spent on consumption or rolling existing debt.
It is therefore likely that a large portion of this enormous liability has no matching asset in the hands of the borrower. Our view is that unsecured lending is causing more harm than good in SA. It is a serious problem requiring government intervention...
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