WATCH: Consumers urged to beware of reckless lenders

Cape Town - Although credit providers are more vigilant when granting credit to consumers, some still charge exorbitant interest rates to a desperate few, warned Debt Rescue CEO Neil Roets.

In a studio interview with News24 Live, he said a lot of credit providers irresponsibly provided credit to consumers, but this has improved after the implementation of the National Credit Act (NCA).

“Credit providers and especially the banks became more vigilant when it came to giving out secured loans such as home loans and vehicle finance. But a lot of credit providers still gave out unsecured credit like credit cards, personal loans and store cards.”

Roets said the rise in unsecured loans could be attributed to the fact that credit providers wanted to make up for the money that they were not giving out for home loans and vehicle finance.

Watch the full interview:

“We saw a huge increase in the number of unsecured loans granted to consumer and that is why it is very important for consumers to be educated,” he said.

People have been cautioned to only take on credit if they really can afford it. Credit providers are bound by law to perform affordability assessment tests.

“Unfortunately you also get credit providers, known as the loan sharks for instance, who don't really comply with the NCA and the rules of the National Credit Regulator and they give out loans at exorbitant interest rates and sometimes people are so desperate that they fall for this.”

Roets said the most important thing that cash-strapped consumers should do is to draw up a budget and stick to it, and to cut back on luxuries.

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