Home loan payments take back seat to cars payments in crunch times
Consumers may opt to repay a car loan over a home loan because of the payment required, access to other forms of credit and even what they believe the consequences might be of the skipped payment
Financially distressed South Africans are prioritising their vehicle loan repayments over their home loans, contrary to general expectations, a credit bureau’s research shows. TransUnion tracked the payment behaviour of about 325,000 credit-active consumers who had at least one credit card account, one vehicle loan and one home loan to see what happened when they were unable to meet all their credit commitments, and how they prioritised payments. Conventional wisdom suggests that when consumers do not have enough to meet all their obligations, credit-card payments would be first to be dropped from the payment list, followed by vehicle loans and only then would consumers skip repayments on their home loans. Carmen Williams, director of research and consulting for TransUnion SA, says the bureau expected to find that consumers would only stop paying their home loans in the direst of circumstances, and that these payments would be prioritised above all other types of debt. This is becau...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.