Debt, according to Luke Hirst MD of Debt management experts Debtbusters.co.za, is the likely cause of stagnation across a number of sectors in the South African economy.
“Indebted South Africans spend 75% of their income servicing their debts – it’s no wonder they can't afford to buy a new car".
According to Nico Vermeulen, executive director of the National Association of Automobile Manufacturers of SA (Naamsa), new vehicle sales for the first two months of 2009 fell by 36.2 percent, or 37 155 vehicles, to 65 529 units, from 102 684 units sold during the same period in 2008.
Debtbusters reports that many of its Debt Review clients are required to sell their second cars and Hirst warns indebted South Africans that it is often vehicles that cause complications.
"Many people don't realise how expensive cars can be. With insurance and running costs, buying a new car will cost more than the purchase price in the window.
Of greater concern is the perception that owning a fancy car is a symbol of success - vast sums of South Africans are driving around in cars they can't genuinely afford. As times get tougher, I expect more South Africans to think twice about paying for a new car on credit.”
Hirst also advises clients to be very wary of buying vehicles on a residual value, where after you have made the required number of monthly payments you have to pay a large balloon payment which many clients cannot afford.
It is best to do a budget and work out how much you can afford to pay for a car (this should include the monthly repayment, maintenance & insurance) and then use this monthly sum as the maximum monthly amount for the vehicle.
As South Africa’s largest Debt Counsellor, Debtbusters are experts in the debt field, wholly focussed on resolving debt problems of individuals.
Debtbusters range of debt solutions extends beyond that of debt counselling and, as a result, their clients frequently fall foul of vehicle related debt.
Their debt services include free consultations and advice as well as informal debt management and the formal debt review process.
All of these are available through their call centre on 0861 NO Debt, or on the online application form on the website.
