Take charge of your money

Nqobile’s debt story

Nqobiles Debt Story

A real story from a reader! Unedited

So the year was 2017 (I was 23 years old at the time), in April my 2 friends were building houses for their families and were asking me for financial assistance because they had already taken out personal loans with their banks. Being a thoughtful friend that I am I went to African Bank and took out a personal loan to the amount of R20,000. and we had agreed that I will give them R5k each, leaving me with R10k because at the time I also wanted to buy a fridge and a microwave for myself.

I did not read too much into the contract, all I wanted was to just have the money reflecting in my bank account. After seeing that the annual interest rate is 28% I requested that each of my friend pays me 28% of the R5k, making it R1,400. The first instalment went off, R946.89 in the first month I was like “okay cool”, but in the 3rd month I got the statement and noticed that it seems like I am only paying half of this instalment and the debt wasn’t decreasing as much as I’d like because there was no ways I was gonna pay for 54 months. My one friend paid me off within 5 months. My other friend was struggling so we made arrangements of R500 per month until she finished.

I was devastated because I felt like I was working backwards with African Bank, my friend suggested I get a consolidation loan with Nedbank, so I did that. African Bank was a nightmare to say the least. So I decided to decrease the number of months to pay to 24 months and the new instalment was R1,210.78 (so this was October 2017). The amount of consolidation to African Bank was around R29k!

How I paid it off

How I got out? I decided to make an additional R700 stop order towards the loan so the total I was paying was R1,910.78 per month. I had to cut down on shopping for clothes because I used to do that every single month, I also had to cut down on buying hard copy books. Going out was also limited.

I finished paying the loan in March 2019 and the excess amount of almost R2k I am saving it for a deposit for my first car because that is what I want to buy this year.

So that is my story, and you won’t see me going to a bank for a personal loan, never!!!

Comments from Brendan @ Take Charge

It’s great hearing about real-life situations and how people get themselves into debt, and what they’re doing to fix it. Despite all the credit acts and regulations it’s still really easy to get yourself in a mess (as you can see with Tumi’s debt story or even my own debt story) and you really need to understand the effects and pitfalls of debt.

Let’s look at a few lessons from the story above.

Don’t let friends get you into debt

Nqobile took out loans on her friends behalf but as you read, the one friend paid it off slowly at only R500 per month. The result is that Nqobile herself was fully responsible for the debt and if anything went wrong it would be her name and her credit score on the line.

It’s definitely tricky when friends and family ask for money, but if you don’t have the money you should really try not to get yourself into debt for them; it’s really not a good idea and could get you into a lot of trouble!

Interest Rate

A personal loan generally has a high interest rate, but 28% is remarkably high! It’s not just African Bank though, many financial institutions charge these rates.

Read the contract and ask questions!

You see how the R20,000 loan became R29,000 in just a few months? That is scary!

Find Help

If you’re in a situation that you can’t cope with, find professional help! There is nothing embarrassing about meeting with a debt counselor or simply requesting an assessment (many debt counselors will offer an in-depth assessment for free). It’s really a good thing to start fixing your situation!

Pay Extra

This is a key point and something which we read about in Tumi’s debt story too. Pay as much as you can towards your debt as it will help you pay it off so much faster and you will end up saving money on the interest.

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