Expert Unsecured Loans Not Likely to Leave South Africa
Capitec CEO frustrated by citizens not understanding the evolution of financing
However, the unsecured lending, which is the form of high-interest loans that banks give out to many of the South Africans, predominantly in the poorest areas, is not likely to vanish any time soon. In fact, in the future, consumers will be less reliant on traditional bands and utilize unsecured loans more often for houses and cars, according to Stassen.
What is more controversial, is that the future of secured credit, wherein loans are backed by housing and asset companies, will continue to be bleak. “It will have to fade,” says Stassen.
Stassen's bank, which is a Stellenbosch-based company, is the second largest unsecured credit lender after African Bank. However, unlike the latter bank, Capitec is growing its own loan book, and has been granting larger loans that last for longer periods to an economy that struggles with continued unemployment increases.
“I don’t know whether they want to forget the past, but unfortunately the past is here to stay, and especially with regard to credit,” Mr Stassen said in an interview with Business Times.
Capitec is utilizing its position to capitalize on the gap in both credit created during apartheid years, as well as the four banks that do not grant loans to those who do not hold asset collateral.
Stassen stated that the link between South Africa's political landscape and the credit landscape is clear to most South Africans. “Black people in particular, had to fund long-term assets with short-term expensive credit,” he stated.
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