Covid-19 has greatly impacted the credit active population of South Africa (and all over the world), curbing the appetite for new credit.

The Q3 2020 South Africa Industry Insights Report (TransUnion) shows the number of new bank personal loans, and home loans extended in the third quarter fell by more than 60%, while new clothing accounts were down almost 70%.

This lack of new credit accounts played a role in pushing NPL (Non-Performing Loan) levels up through the bad debt distillation of no “new good-money” flowing in.

Mortgage books worsening is always a bad sign for the economy. Higher NPL’s means increased foreclosure, which in turn means a reduction in property value which results in more shortfalls; massive changes to LGDs (Loss Given Default) and a huge impact on provisions.

85% of consumers are worried about their ability to pay bills and loans, with 29% expecting to run into a shortfall within one month (TransUnion survey among South Africans). With this much pressure on consumers, credit collectors are faced with the difficult task of collecting monthly payments, and as the statistics stand, it is highly likely that a consumer will be defaulting on at least one account.

The key to surviving in this climate is to ensure your payments are prioritised over other collectors. However, that is what everyone else is also chasing… Read our case study to find out how you can improve your chances of collecting payments and preventing defaults

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