File image: IOL
File image: IOL

What does a hold in rates mean for your credit agreements?

By Supplied Time of article published Mar 29, 2019

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The good news for consumers with personal loans is that the interest rates on most personal loan agreements are fixed at inception resulting in no impact to the customer irrespective of whether the repo rate is increased, decreased or if it remains unchanged.

Monthly repayments on personal loans won’t be impacted by rate movements, however a hike in rates would impact other debt obligations which inevitably has a knock-on effect on consumers’ overall financial position.

Here are some steps to follow to ensure you meet your existing debt obligations on an ongoing basis:

  • Budget and revisit your budget on an ongoing basis (not just annually).
  • If you have money to spare, consider paying back more than your monthly repayment to reduce your overall cost of credit.

Live within your means; foster a culture of responsible expenditure for your household, this can go a long way in stretching your Rand. In the event that expenses or unforeseen circumstances do creep up on you and result in you considering credit, make sure that you select the right credit product for your needs.

If you hold credit products and you are struggling to make payments, touch base with your financial services provider to find a suitable solution rather than missing monthly repayments.

Mfundo Mabasa, Growth Head, FNB Home Loans says: 

We believe that interest rate staying unchanged will serve as much needed relief to households, as their debt repayments would remain unchanged. While inflation has remained relatively low in the past few months, consumers have increasingly come under financial pressure, due to rising utility bills and property rates; higher fuel prices and higher income taxes. This is further compounded by low wage growth as many employers are under pressure. Looking ahead, we do not expect further interest rates hikes for the remainder of 2019, which should provide auxiliary support to already cash-strapped households.


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