Cape Town - If you are under financial strain and battling to finance your vehicle repayments then you should consider debt counselling, suggests Debt Rescue CEO Neil Roets.
“If people struggle to pay back any of their debt whether it is vehicle finance or home loan or even unsecured debt, then it is advisable to contact a debt counsellor as soon as possible,” he said in a studio interview with News24 Live.
Commenting on car loans in particular, Roets said if you starting to default on payments then your credit providers will definitely start taking action against you because a vehicle generally depreciates in value.
“That vehicle is the security to the bank or the credit provider and now this consumer can't afford to pay the instalments anymore and the value of that vehicle is just decreasing everyday so it is in the best interest of credit provider to take action as soon as possible against the consumer to limit the damage that they are going to suffer,” he explained.
Roets said it is therefore critical for consumers in such a situation to seek help as soon as possible.
Watch the full interview
Debt counselling is an option available to distressed consumers, said Roets. It is a process in terms of the National Credit Act where indebted consumers are granted the opportunity to pay off their debt in an affordable manner.
“Your instalments are lowered in order to make it affordable to you so that you have enough money at the end of the month to pay for living expenses.”
This process, said Roets, also gives consumers legal protection.
“Technically speaking debt counsellors are independent functionaries of court looking after the best interest of consumers and credit providers.”
He said this process is supported by credit providers because they are getting their money back, while at the same time it offers relief to consumers because they can make these payments in a manner that is affordable.
Roets explained that debt counsellors assess the financial condition of consumers holistically.
“We communicate with all your credit providers whereas if you want to approach your credit providers on your own, they are not going to take into account what you owe other credit providers.
“So you might strike a deal with them but at the end of the day if you don't make a deal with every credit provider that you have then the whole picture is not going to work out.”
Roets added that having an existing relationship with credit providers allows Debt Rescue to negotiate better repayment plans.
“If they have to make these arrangements with consumers themselves then chances are they are not going to be as lenient as they are when working with debt counsellors.”