Microlenders to blame for wage demands

[adrianh]

Maybe the problem goes deeper. We live in a country with the 1st world mixed within the 3rd world. Now lets look it the problem from a lateral perspective: One of the fundamental differences between the two worlds is that the first world is able to get more credit because they generally earn more. What is the difference between a guy earning R100K a month and spending Spending R101K a month on debt and a guy earning R500 a week and spending R501 rand...could it only be status?

Our problem as a society is not that we don't have enough money per se, it is planned obsolescent consumerism. We eat fast burning expensive crap food, we buy ridiculously over priced over specced cars & houses, we buy buy buy only to replace that which was good last year.

The problem lies within our marketing driven foolish minds that are made to believe that we all need to have just a bit more than we can afford, a better cell phone, car, shoe or whatever. We are unable to see that money is simply a tool like a shovel is a tool.

[Marq]

Thats quite right.
Fuelling this problem and keeping society foolish is the name of the game. The main culprits behind the scenes - advertising and marketing by the .......banks and corporates who know how to spin you a yarn or two.

Are they winning -

Would a financial literacy course not be better. Nedbank's Eugene ads seem to go in that direction

Does Nedbank want to educate you or ....give you a loan and keep you in nice clothes and big car.
I said it earlier - the banks are to blame for most things.
Its a vicious catch 22 scenario for most.

[adrianh]

Now here is the question: Who is to blame, is it the marketer presenting the product, is it the bank providing the loan or is it the dumba$$ who can't help himself.

By analogy: If various ladies of the night offer their services in many different and exciting ways would everybody use their services because they are such good marketers & advertisers. How come most people are able to control the urge to buy their services yet they are unable to control the urge to buy a new TV or cellphone ?

Marketing does not put a gun against anybody's head to do anything, stupid people do stupid things because they are too stupid to realize that they are actually in control of their own urges, be it to shag the neighbours wife or buy a new BMW on credit.

[Marq]

Good point.

Seems subtle is more powerful than the gross.
But then the ladies of the night are not on every street corner or selling me their wares (is that the right term here) every five minutes on the box - so not sure if that is a fair reflection of outcomes.

[Miro Bagrov]

Now here is the question: Who is to blame, is it the marketer presenting the product, is it the bank providing the loan or is it the dumba$$ who can't help himself.

By analogy: If various ladies of the night offer their services in many different and exciting ways would everybody use their services because they are such good marketers & advertisers. How come most people are able to control the urge to buy their services yet they are unable to control the urge to buy a new TV or cellphone ?

Marketing does not put a gun against anybody's head to do anything, stupid people do stupid things because they are too stupid to realize that they are actually in control of their own urges, be it to shag the neighbours wife or buy a new BMW on credit.

Well - what you are seeing is just the message that the boss at Treasury wants to send out to the micro-lenders, to say 'I will come down on you!'

You see the micro-lenders are not the problem here. The government is slipping into chaos, and losing control of the interest rates in SA.

So the name of the game is, make more trouble for micro-lenders, so that the banks can get back their clients. That's because the banks are going down. The government is going down. The international system of markets are going down.

The issue, really, is, that the market is getting less and less sensitive to the Reserve Bank's changes in interest rates. Slowly, they are losing the ability to tell lenders on the sidelines how much they can charge for loans.

That's the whole point. It's obviously not the micro-lender's fault.
--- Because if they want to attack micro-loans, they must also attack unsecured-lending-accounts (credit cards & 'short-term' loans) of the major retail banks.
But somehow, they are not attacking the banks, who, by the way, have a larger % share in the micro-loan market than micro-lenders!

[Dave S]

Let's put ourselves in the shoes of the "have-nots". A chap is walking through the rain from a taxi rank and a guy drives past in his Beemer and splashes a puddle of water over the guy, now this chap is even more determined to get a set of wheels so he doesn't need to get wet every day, he can't afford cash, so he takes a loan and buys a small car. Or the maid who is cleaning house, when the lady of the house turns on the 3D Multi-View, space-age TV that has 1000 channels, the maid also wants this, so she takes a loan and gets a small new TV.

The banks and institutions that have given him/her the loan did a credit check and manipulated it so that they could lend/borrow the money and they know that when (not if) these persons default, they will be able to take back the car/tv and sell these, but the defaulter is still responsible for the loan, so they get their money either way, at the same time the institution that gave the loan will have claimed from a defaulter insurance policy, so they end up with even more money than what was defined by the original loan. In short the bank wins!

Now the guy who bought a car is still walking in the rain but he also has to pay the variance from the loan, so he is even more in financial doodie.

The old saying "if you take a loan, make sure you can cover it in cash" does not ring true as regards people that don't have cash in the first place.

[IanF]

From a moneyweb article

The Gilbert affair

Gilbert this month presented Moneyweb with files which he believes prove systemic garnishee fraud in the industry. He has also made the claim that some customers are charged for credit life insurance at a rate of 18.5 times a related industry benchmark, which would be unlawful in terms of the National Credit Act (NCA).

Moneyweb is currently investigating these claims.

What this seems to imply is that there is a lot of underhanded dealings in obtaining the garnishee orders instead of working within the rules. This then does cause hardship for the guys who go home with no or little of their earnings.
The real question is "Is there anyone in government willing to try and sort this out."

[Marq]

I keep getting junk mail, blank credit cards and offers of loans in my postbox.
This is done using information that I do not normally use out there.
I realised last month where the source of this junk mail comes from.
Its via my staff, who all have credit with these retail stores, banks and micro loan companies.
So not only have they captured the salaries of my staff, they also spam me and expect me to advance loans and salaries inhouse to pay for their creations.
I now do a weekly rant and rave to the staff who hopefully are getting the picture.
Their reasons for taking out the loans and credit in the first place......Angazi! everybody does and its nice to have nice stuff.

[polpak]

Education is the key to resolve - well reduce, this problem.


Is not useful telling others loans are not possible, firstly because most shall not believe this, second we all notice how the wealthy obtain loans for everything to improve their lives, so why not the rest of us ?

Many of today's wealthy once were poor, well not so wealthy.




Need educate to ensure others learn how to recognize when credit becomes a dangerous risk to them, learn to recognize their personal risk points.


Need learn how our incomes divide into essential, optional and dangerous commitments, some commitments of long term benefit, many of very short term benefit and perhaps longer term difficulty.


This will not be achieved quickly, many of us once were slow learners :-)



We all need learn how much of our incomes are committed already, how much not yet committed, how only the small percentage of not yet committed money should be committed, to retain a percentage for unexpected changes or disasters.

Is useful to understand how credit levels obtained but not used, enable short term essentials to be met.


Show individuals how by managing their reserve cash account, using it as the meanest credit provider around. demanding largest % of interest and quickest repayments, can allow them to grow their wealth to where they can afford more than they expected.



Are these basics taught adequately in schools, particularly to those on low incomes ?

[bjsteyn]

Hey @AdrianH, i feel your sentiments. About a 2 years back, i was earning about R3500 (doing computer programming, believe it or not). I was working at the company for about 3 months, yet FNB gave me a lone for R25000 and I had to pay back R50000 over 3 years.. That was my first real permanent job, up until that point i was working for myself and i was not getting by because it is hard to work for yourself if you don't have transport. So i said OK ill take the job, it is something to put on my CV and thought they are just gonna look if i can do the job and raise my salary and they will relise that i know what i am doing. Didn't have transport and took out the loan, so i can get my own business going partime, doing IT stuff. I baught a new bike and after 6 months i was only earning R3800. I realised, im gonna go nowere at that company, as they want quantity not quality and was getting behind on my loan repayments. So i decided to quit the job, hell i could earn more working for debonairs. Neways, had to sell the bike, but still sat with the debt of about R42000.

I couldn't pay for a while and they handed me over to the lawyers. I have a solid job now, and have gotten what i ow down to R20000. But in March this year I made a payment for R1400, that 3 months later still hasn't been deducted off my fnb loan account, that i have paid interest on for 3 months that i shouldn't have. I have emailed the lawyers about 7 times about it and everytime i receive a return receipt that someone has read my mail (actually several per email, they definitly read it more than once) , but yet they do not respond to me.

I have also spoken to them on the phone about it about 3 times (When they make their monthly curtisy call, haha) and every time they say, they will look into it, yet nothing is done. So emailed them again and said i will not pay again until they sort it out.

Well today they phone me again (yes, i didn't make a payment this month. Took the money i normally paid them and invested as an short term investment to make back the interest i shouldn't have paid), and they threatend me that i will have to pay lawyers fees if i don't make a payment this month, yet i mention the missing money again. Again they said they will look into it today and get back to me, although that was second priority to them wanting a payment from me, and again they did not get back to me. They expect me to make a payment to them, yet R1400 of my money paid to them has gone missing and i have paid interest i shouldn't have.

I feel like taking them (fnb lawyers) to the lawyers and fnb as-well as a matter of fact. The lawyers for the R1400 that has gone missing, the interest i paid and all the stress they put me threw phoning 2 times, sometimes 3 times a month.(Haha, while im suing them why not add that!) . FNB because i was bound to fail on loan repayment on the salary i was earning, and they shouldn't have loaned me that money. I have no idee how they approved that loan. I wanted it, but they shouldn't have given it to me (now looking back)

If i could go back i would have never taken the loan in the place i was, but that is how you learn from your mistakes!

Finally settled my FNB loan, i can breath again!