R1 Trillion Owed to South African Banks

October 15 - Recent figures put out by the National Credit Regulator shows that of March 2010, South Africans owed banks, retailers and other credit providers a staggering R1.14 trillion.

Out of that, R1,02 trillion was owed to South African banks.

As such, it is clear that the country's population is very much still in debt, with many unable to meet their monthly home loan and car loan payments.

According to statistics, as many as 9,000 people each month turn to the regulator for a debt review as they simply cannot make ends meet.

Despite the fact that the National Credit Act limited banks' lending ability to provide home loans to South Africans, the recession is still taking its toll.

Many cash strapped South Africans are exacerbating their situations by turning to short term loan sharks who charge exorbitant interest rates.

But while the recession definitely plays a role in the country's debt problem, the Regulator warned that many South Africans still insist on 'living it up' and spending lavishly, despite the fact that they have no money to finance their expense lifestyles.

Since 2007, when the NCA was introduced in South Africa, nearly 200,000 people have applied for debt review.

"There are still very high levels of over-indebtedness in South Africa and a large portion comes from debt prior to June 2007," said Tony Richards, the chairman of the Debt Counselors Association of? South Africa. "

"But there are a lot more people entering the arena where they have lost jobs, gone on short time and don?t get paid overtime anymore, or their wives have lost their jobs, and it?s very difficult to find jobs in this current economic environment," he said.

One problem is that of investors who bought a few properties during the boom with the intention of renting them out. However, these same people are stuck with low rental income and high loan payments, making their problems even worth.

10/15/2010 9:55:46 AM