CUSTOMER STORY
An astounding 46,8%
of the country’s 19,98
million credit-active
consumers have
impaired records.
maximum interest rate payable on unsecured loans is 31% – almost
double the mortgage average of 16%. And yet, consumers like
Carla Adams, a 35-year-old accountant, say that they have been
actively encouraged by bank consultants to access these unsecured
loans for deposits.
Adams had recently left her job for new pastures, and with it,
she also parted with her company car. After deciding on a car, she
applied for a vehicle loan but was told that she needed to give
in a deposit since she had just started a new job. Adams told the
consultant that she didn’t have the amount required, and was
surprised at his advice to apply for an unsecured loan.
‘Instead of giving me a 100% loan for vehicle finance, why
do they offer me a 90% loan and encourage me to make up the
remaining 10% with a more expensive unsecured personal loan? I
work in finance, and it just didn’t make any sense to me at all. If
I had agreed to that, I would be going down the road to financial
ruin,’ says Adams.
She adds that the inconvenience of additional paperwork and
administrative costs was a mechanism in what she called the
bank’s “money-making scheme”.
However, Rudolph Mahoney from Wesbank poured cold water
on Adams’ claims, saying that this practice was more than frowned
upon in the banking industry – the application simply wouldn’t
meet the requirements of the National Credit Act.
‘We would never tell a customer to take out an additional
unsecured loan. Unlike home loans, we do not approve loans based
on deposits as a percentage of the applied amount.
‘Based on the client’s credit score we may ask for a bigger
deposit, but we will never recommend that the client take out
an additional loan, because we know that at that point the client
cannot qualify for more credit. However, we will recommend that
the client buy a cheaper car,’ says Mahoney.
Standard Bank’s Sihle Bolani agreed with his counterpart,
saying: ‘It is not our practice to encourage customers to apply for
unsecured loans to cater for deposit requirements on their vehicle
finance. In fact, we do discourage such practice. It defeats the
purpose for which a deposit is required – that being to limit the
amount of debt taken up by the customer in relation to acceptable
affordability of instalments or repayments, and reduction of
risk associated with the funding of a depreciating asset. Where
we become aware of such intent by the customer, we do advise
against the approval of the application of such vehicle finance,’
stated Bolani.
According to Bolani, there are only two acceptable sources of a )