Thibnk twice before getting a loan

You should think twice before you borrow money or apply for credit, the National Credit Regulator (NCR) warns.It says the number of South Africans who are struggling to pay off their debt is at a record level: more than 80 000 people have applied for debt counselling since the National Credit Act was introduced in 2007.About 40.5 percent of consumers who use credit have impaired credit records. An impaired record means that at least one of your accounts is in arrears by three months or more, or that a judgment or an administration order has been issued against you. Peter Setou, the senior manager of education and strategy at the NCR, says borrowing is reckless if you borrow money without having a plan for how you will repay it, borrow from unscrupulous credit providers or sign loan contracts you do not understand."More often than not, you will eventually find yourself in a worse financial predicament than when you started," he says. Borrowing does not only refer to applying for a cash loan. Buying on credit - in the form of credit cards, clothing accounts or overdrafts - is simply borrowing in a different guise.Don't duck and diveSetou says the NCR has noticed that consumers who are over-indebted tend to panic, avoid their creditors and take on more debt to pay off what they are already struggling to repay. "By doing so, you only get yourself into more financial trouble," he says. Instead, you should approach your creditors and work out a repayment plan.You will need to cut out all non-essential spending, but don't be threatened or bullied into making commitments you cannot meet, the NCR says. A creditor must give you written notice before it can approach a court to enforce the payment of a debt. The notice must inform you of the options available to you. They include:
Seeking help from a debt counsellor; or
Bringing your payments up to date through an alternative arrangement.If it is essential that you apply for credit, you should compare the interest rates and other costs of a number of different credit providers. Quotations from credit providers are valid for five days, which gives you time to decide whether to enter into a credit agreement.

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Stefan