Planning ahead and sticking to the budget is the best way to ensure customers do not get saddled with the negative consequences of defaulting on debt. However, unexpected events can scupper even the best laid financial plans.
Mr Cyril Zhungu, Head of Automotive Retail at Standard Bank Vehicle and Asset Finance says when circumstances do change in life, it is important to re-evaluate what you can afford and ensure there is no negative effect via non-payment.
“Vehicle repossession is never the default action for Standard Bank but rather providing the correct advice from inception of such contract relationships. We aim to find other solutions that ensure customers keep their vehicles for their intended use. This is why we make the process of seeking alternative payment options and providing the correct guidance a good starting point” says Zhungu.
Maintaining a good credit profile is one of the barometers used as it gives any loan provider a bird’s eye view of any potential risks and the ability to manage credit over time.
“Skipped or late payments are often the major reasons behind a customer receiving a negative credit profile. Remember this profile will be used for future credit finance requirements and such credit track record is a critical tool for every customer who uses credit for their financing needs,” says Zhungu.
Unfortunately, some of our customers tend to leave it too late to prevent adverse issues being reflected on their credit profiles. “The best course of action when times get tough or circumstances change, is to speak to your financial provider in order to come up with alternative payment solutions.” says Zhungu.
Zhungu points out that being prudent and realistic about budgeting is the secret to managing credit risks – and this starts with choosing the appropriate financing arrangement from the start. A key issue for Standard Bank is to ensure that affordability is in line as someone’s ability to repay debt over the desired and agreed contract period is important for a successful banking relationship.
“This is a why simply using gross salary is not necessarily the accepted way of determining if someone can afford or qualify for finance.” says Zhungu. “It is imperative that affordability is based on disposable income after taking into account all declared expenses by a customer due to strict compliance required of the Bank in terms of the National Credit Act. Equally, important is the right advice relating to such vehicle contracts as well.”
“Choosing the best payment options for you is very important and this decision should never be made in haste. It must always be kept in mind that a vehicle finance repayment is not the only expense related to ownership as a car comes with regular upkeep and fuel costs, while insurance is a cost to factor in. This includes structuring contracts with value-added products which provide both customer and asset protection in case on any unforeseen circumstances.
“When you hit a wobble on repayments it is important to let us know immediately if your life circumstances change so you can get assisted before it’s too late,” concludes Zhungu.