Consolidating debt with fnb
“It’s a short-term fix, not a remedy for the underlying problem,” says Paul Slot, the president of the Debt Counsellors’ Association of South Africa. For example, your home loan is usually your cheapest form of credit.Depending on your credit profile, your rate is a little above or below the prime rate (currently 8.5 percent).Representative APR 15% , Representative insurance rate 5.4%.
For this reason, many people use their home loans to finance big-ticket items such as appliances or furniture, making sure they don’t stretch the repayments for such depreciating assets over the term of their bond.If you consolidate short-term debt, you get a lower payment, but if you stay indebted longer, the lender receives more interest, which is why some lenders are in the debt consolidation business,” Smit advises.“It is normally a bad idea to pay a short-term acquisition, like clothing, over a long period.Speak to your bank before your cash flow is in dire straits and think twice before you consider debt consolidation,” Smit recommends.
As a Category A Consumer, you’ll be covered (either to settle your outstanding obligation in terms of your credit agreement/facility or pay installments towards your credit agreement) in the event of death, permanent disability, temporary disability, retrenchment, unpaid leave or short time.
That may seem harsh, and it wouldn’t apply to people who have landed in debt due to retrenchment or reckless lending.