MANY people are feeling the pinch financially due to the effects of months of lockdown in South Africa putting a dent in their plans for the year.

However with the regulations being relaxed, many South Africans are starting to shopping again.

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Some people might have spent their early stages of lockdown de-cluttering, and now need to make a few purchases to invest in their new lifestyle.

Whether that means upgrading your computer, or appliances, or simply getting a desk to make working from home easier, many might be considering opening an account with a retail outlet to make this purchase.

However Sarah Nicholson, commercial manager of a personal finance website has a few suggestions of things people should consider before signing any new store account application form.

“Before you take on a credit agreement, the store needs to carry out an affordability assessment,” said Nicholson.

“You need a pre-agreement quotation stating the interest rate and loan period. This must also show all the fees, as there may be costs that you are unaware of, such as insurance and monthly services.”

Do I need insurance?

When lockdown plunged many people into unemployment and financial hardship, the value of an account protection plan really became apparent to many who never considered it before.

An account protection plan ensures that the full outstanding balance on your account is settled in the event of death, disability, loss of income or retrenchment.

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Nicholson stressed that being afraid to ask questions fearing you might appear stupid, is normal.

However, what is actually stupid is not asking these questions before making a decision which might make a big impact on your future financial well-being.

Checklist

Follow this checklist before you approach a store for a loan:

• Proof of identity with a valid ID or passport (you must be over 18 years old);
• Proof of residence, such as a water or phone bill; or a letter from the property owner confirming that you lease from them, plus their proof of residence;
• A current, original pay slip to show you are employed; or, if you are self-employed, a recent three-month bank statement in your name or your company’s name;
• Your cellphone number; and
• Be prepared for a credit bureau check.

“A credit score plays a key role in whether a lender decides to offer you a loan,” explained Nicholson.

A credit report will let you know if you have any problems in your profile which potential lenders will need to consider.

It also allows you to see where you stand in terms of outstanding debt.

Nicholson also advised that when applying for a store loan people find out who to approach in the event something goes wrong.

The Credit Ombud resolves complaints when a consumer has a dispute with a credit provider.

Once you’ve applied and qualified for credit, and taken your purchase home, stick to the agreement and pay the loan promptly.

“Don’t get caught in the revolving credit trap, which means you can buy any time as long as you have buying power on your account and your monthly payments are up to date. Rather stick to buying this one item, and paying it off before purchasing something else,” advises Nicholson.

Caxton Local Media Covid-19 reporting

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At the time of going to press, the contents of this feature mirrored South Africa’s lockdown regulations

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