SA furniture retailers have consistently used unsecured credit & financial products to behave in a reckless & predatory manner.
- African Bank's unsecured loans to Ellerines customers
- Lewis selling employment cover to pensioners
- Steinhoff's high risk, off balance sheet loans
- African Bank's unsecured loans to Ellerines customers
- Lewis selling employment cover to pensioners
- Steinhoff's high risk, off balance sheet loans
Rolled up into monthly payments are often frivolous charges like unemployment insurance & funeral policies.
Here's a fridge costing R5.8k cash. You end up paying R14.5k after 3 yrs.
That's 2.5x more & an effective compound annual interest charge of roughly 36% a year!!
Here's a fridge costing R5.8k cash. You end up paying R14.5k after 3 yrs.
That's 2.5x more & an effective compound annual interest charge of roughly 36% a year!!
Customers can't afford to purchase items cash.
They receive their pensions, weekly wages or monthly salaries & then purchase furniture/ appliances.
So you're no longer a furniture store but now become a "high yield, credit institution*"
*This is a fancy term for loan shark.
They receive their pensions, weekly wages or monthly salaries & then purchase furniture/ appliances.
So you're no longer a furniture store but now become a "high yield, credit institution*"
*This is a fancy term for loan shark.
I know you remember the Big Short. This big slab of debt, chiselled into tiny pieces and sold off to investors?
That's exactly what happens with debtors in retail. You can sell those debtors to other people.
Commercial banks love to buy these debtors books. They LOVE it.
That's exactly what happens with debtors in retail. You can sell those debtors to other people.
Commercial banks love to buy these debtors books. They LOVE it.
Foschini Group's consumer finance group was RCS. RCS owned the credit for Game, Shoprite, Makro, PnP, etc.
Foschini sold RCS to BNP Paribas for R2.7bn. Standard Bank has a 45% stake in RCS.
RCS now owns Edcons loan book. Edcons debt was partly owned by Absa.
See the trend?
Foschini sold RCS to BNP Paribas for R2.7bn. Standard Bank has a 45% stake in RCS.
RCS now owns Edcons loan book. Edcons debt was partly owned by Absa.
See the trend?
Here's where it gets even uglier. 66% of customers pay 25% of their net income to service these loans.
If you can't pay, there's a good chance they reschedule the loan into smaller pieces over a long time frame & ...more interest.
Loans used to fund consumption are the worst.
If you can't pay, there's a good chance they reschedule the loan into smaller pieces over a long time frame & ...more interest.
Loans used to fund consumption are the worst.
Capitec has managed to pull it back. Yes, default rates are still high but it's improving.
Between 60-70% of its loans are longer term, so funding for vehicles, houses, start-up businesses.
They also dynamically adjusted their credit applications, making it harder to get loans.
Between 60-70% of its loans are longer term, so funding for vehicles, houses, start-up businesses.
They also dynamically adjusted their credit applications, making it harder to get loans.
This furniture/appliance situation is a personal. My granny was hooked on these "R200/ month for 4 appliances". She didn't even need it but was coaxed into it.
Had to have a respectful sit down & go through how even though it's a little sum, you end up losing in the long run.
Had to have a respectful sit down & go through how even though it's a little sum, you end up losing in the long run.
There's two extreme ways to rob:
1. Rob one really wealthy person
2. Rob millions of people by taking tiny sums from them
#2 is called "Salami Slicing". It's that 50 cent fee you have no fucking idea what it's for.
"Rounding" adds up over millions of accounts.
1. Rob one really wealthy person
2. Rob millions of people by taking tiny sums from them
#2 is called "Salami Slicing". It's that 50 cent fee you have no fucking idea what it's for.
"Rounding" adds up over millions of accounts.
We should do a thread on the most effective ways to rob someone financially.
(for educational purposes of course)
(for educational purposes of course)
