While lower interest rates offer short-term assistance by reducing loan repayments, cheaper credit can also be a risky temptationIt’s not just the role of the bank to be responsible when it comes to loans or credit; consumers need to be more responsible borrowers too.Lowered interest rates have helped many South Africans face the challenge of a loss of income while still needing to keep up their repayments on their home, vehicle and personal loans and other credit agreements.
Responsible lending is a commitment by a financial institution to lend only an amount of money to its clients that it’s confident they will be able to repay, without getting into financial difficulties in the longer term – especially if interest rates go up. “The best way to do this is to be more diligent in managing your expenses and not be tempted into taking too much credit or accepting expensive loan products just because they are offered to you and seem appealing in the current low interest-rate environment," says Ndlovu.