Finance: Increase your cash flow before the festive season
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The effects of the global financial slump are beginning to impact on ordinary South Africans. The increase in interest rates, inflation and economic stressors are causing a growing number of people to default on their loans, with the result that they are losing their cars, possessions and homes.
With the end of the year right around the corner, many of us will also have additional expenses to cope with, such as Christmas gifts or trips to visit loved ones. With the number of debts piling up, it is easy to panic and think there is no way out of the current situation.
“Not true”, says Neil Grobbelaar, joint managing director of specialist credit management group, Real People. “Often the fastest and easiest way to put money back into your pocket and increase your monthly cash flow is to consolidate your debt.
“The purpose of a consolidation loan is to consolidate all of your other expensive debt into one loan that you pay back to one credit provider, such as Real People. The credit provider will then pay off all your other debt and you can simply pay the provider one amount each month,” explains Grobbelaar.
This means that there will be no need to worry about multiple payments to a number of institutions each month, making it much easier to manage your money. Even more importantly, when you are paying instalments to a number of different creditors, your administration fees can be very high. Each creditor costs you money in the form of bank transaction charges as well as the administration, initiation and collection fees charged by each creditor.
By consolidating your debt with one creditor, you will only have to pay these charges once, which already puts money back in your pocket.
You will also reduce your overall monthly repayments. This is because the consolidation loan is often structured over a longer time period than other forms of debt, such as credit cards. While this does not necessarily mean you will pay less over the long term, it can certainly help you in the short term if your monthly debt repayments are more than you can afford right now.
An example of how a consolidation loan helped one South African:
Real People helped Sandy Gxwama reduce his monthly instalments from R3430 to R1917. Sandy owed over R27 000 to a number of financial institutions and after repaying his monthly debt was only left with R1500 to support his family and get through the month. As a result Sandy was not able to afford his daily living expenses and approached Real People for a solution.
Real People’s consolidation of Sandy’s six loans means that he is now able to take home R3013 every month – more than double what he could afford before.
Business News Sector Tags: Finance|