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COVID-19 has resulted in extremely onerous financial realities for large numbers of South Africans; and many may have no other option but to make use of payment holidays for short-term relief. But debt relief can bring its own challenges, says Ayanda Ndimande, Business Development Manager: Retail Credit at Sanlam, while she notes the benefits of Sanlam’s new credit score dashboard – a free facility, which allows you to view your credit position and engage with a live credit management coach to help improve your score. Managing debt is a big part of this process.

South Africans’ household debt increased to 34.1% of GDP in the third quarter of 2019. It’s expected to rise considerably this year as COVID-19 wreaks havoc on the economy and our finances. Ndimande says many may be tempted to take the option of a payment holiday over this time, yet they should be cautious and aware of the implications.

“Many may be tempted to take the option of a payment holiday over this time, yet they should be cautious and aware of the implications,” says Ayanda Ndimande, Business Development Manager: Retail Credit at Sanlam.

“It’s wise to be wary and investigate all your options, especially as these could impact your credit score. If you take a payment holiday, you will still be charged interest on the balance of your loan, including your usual monthly fees.”

The best solution is to continue to pay your credit provider if you can. Ndimande advises people to explore their options, including their credit agreement, to see whether the product is covered by insurance which protects you from unforeseen circumstances such as death, permanent disability or loss of income. Approach your credit provider to find out whether you can lodge a claim against this insurance first.

Sanlam’s credit score dashboard’s coach facility plays an important role in guiding you according to your needs. It gives clients an opportunity to engage with a human coach who can suggest ways to better manage debt to improve one’s credit score.

“Many people know their credit score, but don’t know exactly what to do with this number once they have it,” says Ndimande.

“Our coaches act as a credit management guide by supporting and motivating clients, providing them with the tools and information to make informed decisions to improve their credit profile and better their overall financial position.”

She concludes that now is also the time for people to partner with their financial planners to strengthen these relationships and draw up a holistic plan to stay on track to achieve their financial goals.

 

 

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