New Credit Act


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Are you feeling the new credit act and starting to feel the brunt of the new credit laws?

Trying to apply for new loans? Whether they be home loans, car finance or even personal loans, lending has become some what of a slight pain in the neck. Is the new credit act causing people pain or is it in fact saving them from future debt?

Having worked in the home loans industry for a while now, my hands on experience with South African banks and people falling prey to the new credit act laws has been a common occurrence. I must say though, that contrary to popular belief (see Sunday Times, July 1) top home loan originators and credit lenders are not feeling the brunt as badly as newspapers and various websites are reporting. What is happening though, is that home loan credit applications are taking 2 to 3 times longer to approve. So yes, there’s been a slight lull in terms of home loans grants this month, but that’s due to new systems that the banks have been putting in place and new procedures they are having to follow to get things through Credit and to the lenders. Last month before the new credit act came into place, home loan applications were taking 7 – 10 days for approvals to some through. Applications are now taking 2 – 3 weeks.

So where is my free credit checks?

TIP: Get your applications in as quickly as possible once you’ve signed that offer to purchase. DON’T LEAVE IT TILL THE LAST MINUTE.

Mortgage SA’s, Saul Geffen stated that, banks will not decline people more now that the new credit act is in place, they would just price it better for increased risk. In other words, getting 2% below prime will no longer be the norm for a bond. What the banks appear to be doing is proper financial audits on applicants. GONE ARE THE DAYS where people would qualify for a home loan based on 30% of their monthly income. Now they base your home loan application on your expenses and your NET OUT at the end of the month. So if you’re earning R100 000 a month and your expenses are R95 000 a month, you’ll qualify for a R450 000 bond (roughly).

It does appear though that micro credit lenders, furniture shops and vehicle financing are the people that are starting to take strain due to the new credit act and rightly so… It’s time South Africans found out what those hidden costs are that they’re paying for and it’s time luxuries be given only to those people can afford them.

As I’ve said in all my articles though, this new credit act is there to help South Africa. It’s there to stop the reckless lending of credit by credit lenders and it’s working! LETS ALL WELCOME A NEW DEBT FREE SOUTH AFRICA.