Data from the National Credit Regulator (NCR) laid bare the impact of COVID-19 on the credit market. The regulator has released the Consumer Credit Market Report (CCMR) and the Credit Bureau Monitor (CBM), which cover credit market information from March 2020 to June 2020, at the height of the global pandemic.
The data showed that total value of new credit granted fell by 56.72% quarter on quarter from R126.35-billion to R54.68-billion. The number of credit agreements entered into also decreased by 47.73% quarter on quarter from 3.93-million to 2.05-million.
The following were some of the most significant trends observed in terms of credit granted for the quarter under review:
- The value of new mortgages granted decreased by R25.95-billion.
- Secured credit, which is dominated by vehicle finance, dropped by R18.57-billion.
- Credit facilities fell by R9.71-billion.
- Unsecured credit plunged by R15.10-billion (59.64%) quarter on quarter and by R18.42-billion (64.32%) year on year.
Despite the plunge in new credit, the data showed the total outstanding consumer credit balances as at June 2020 was R1.96-trillion.
Nomsa Motshegare, the CEO of the NCR, advises consumers battling to keep up with their payments to contact their credit providers to negotiate for lower instalments or some kind of relief to assist them with their debts.
“If this fails, consumers are further advised to approach registered debt counsellors for assistance,” Motshegare said.
Motshegare further advised that consumers who have credit life insurance should make a claim against their credit life insurance.
Credit life insurance is an insurance that a consumer purchases when applying for credit or loan. It covers the outstanding debt in the event of unforeseen circumstances such as death, retrenchment, unemployment and others.
In the event of the consumer becoming unemployed or unable to earn an income, the credit life insurance cover ensures that credit providers must settle/pay the consumer’s debt for a period of 12 months or for the remaining repayment period or until the consumer finds employment or is able to earn an income, whichever period is shorter.
Consumers can contact the NCR on 0860 627 627 / www.ncr.org.za.