{"id":1170,"date":"2017-03-28T10:54:22","date_gmt":"2017-03-28T08:54:22","guid":{"rendered":"https:\/\/www.namfisa.com.na\/educates\/?p=1170"},"modified":"2025-07-19T13:05:55","modified_gmt":"2025-07-19T11:05:55","slug":"affordability-of-a-loan","status":"publish","type":"post","link":"https:\/\/www.namfisa.com.na\/educates\/affordability-of-a-loan\/","title":{"rendered":"Affordability of a Loan"},"content":{"rendered":"\t\t
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What Does It Mean to Me As A Consumer<\/h3><\/span><\/div>

\nTo buy or not to buy, that is the question. Consumers requiring finance generally have two options available, i.e. saving-up or saving-down. Saving-up means that you save monthly (or at any other interval as determined by you) until you have adequate funding to buy the item that you need. Saving-down, on the other hand, means that you obtain a loan up-front and \u201csave-down\u201d by repaying the monthly installment on the loan taken.\n

\nThe purpose of this article is to sensitise consumers about the second option, saving-down or servicing a loan. Consumers should be aware of their rights and responsibilities and should refrain from entering into loan agreements that they cannot afford.\n

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<\/h5><\/div>
This article focuses on saving-down\u2014servicing a loan\u2014and aims to raise awareness among consumers about their rights, responsibilities, and the importance of borrowing responsibly.<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Understanding Affordability<\/h5><\/span><\/div>
Affordability refers to the consumer\u2019s ability to repay the loan on the agreed time. This means that the consumer should be able to service all existing obligations, plus the new loan, and still have enough money to sustain him\/herself for the rest of the month.\n

\nThis brings us to the issue of over-indebtedness. What is over-indebtedness? A consumer is over-indebted if the majority of available information at the time of evaluating the loan application indicates that the particular consumer is or will be unable to satisfy, in a timely manner, all the obligations under all the credit agreements to which the consumer is a party, having regard to the consumer\u2019s:\n

\n\u2022 Financial means, prospects and obligations;\n
\n\u2022 Ability to satisfy, in a timely manner, all the obligations under the credit agreements to which the consumer is party, as indicated by the consumer\u2019s history of debt repayment.\n

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What You Must Do Before Taking a Loan<\/h5><\/span><\/div>
A consumer, prior to entering into a loan agreement, must:\n

\n\u2022 Understand and appreciate the risks and costs of the loan and his\/her obligations under the loan agreement.\n
\n\u2022 Provide debt repayment history (as ascertained by making enquiries on a credit bureau, e.g. Compuscan, Transunion ITC, etc.).\n
\n\u2022 Take into consideration their existing financial means, prospects and obligations.\n

\nIt is important for consumers to truthfully answer all questions as posed by the credit provider as it will assist in the correct assessment of the application.\n

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Can I afford the credit?<\/h5><\/span><\/div>
As a consumer, you should perform an independent assessment of your financial situation by carefully checking your latest three (3) bank statements and salary slips. From your bank statements, make a list of all your monthly expenses in order to calculate your existing financial obligations vis-\u00e0-vis your monthly income. Once you have performed an assessment of your current expenses, see what amount is available and whether it is enough to cover the new loan that you consider taking out. To check whether you can afford the new loan, the repayment of the loan should not exceed 50 percent of your net monthly income or 1\/3 (one-third) of your gross income, whichever is the lesser amount.\n

\nWhen doing your calculations, make sure that you consider expenses pertaining to:\n

\n\u2022 Accommodation (mortgage bond or rental payments);\n
\n\u2022 Installment credit (i.e. vehicle installment, clothing accounts, etc.);\n
\n\u2022 Transport (fuel, maintenance of vehicle);\n
\n\u2022 Food expenses\/groceries;\n
\n\u2022 Education (school fees, etc.);\n
\n\u2022 Medical expenses;\n
\n\u2022 Water and electricity (plus other municipal rates and taxes);\n
\n\u2022 Insurance policies;\n
\n\u2022 Domestic help;\n
\n\u2022 Child support\/maintenance payments;\n
\n\u2022 Entertainment (i.e. DSTV); and\n
\n\u2022 Existing debit orders not covered above.\n

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Note<\/h5><\/span><\/div>
It is important for consumers to accurately disclose all financial obligations to the credit provider, so as to be able to conduct the affordability assessment.\n

\n\nIf you experience difficulty in servicing the loan\n
\nOnce the credit has been granted and the consumer experiences difficulty in meeting the monthly obligations, the consumer must, without delay, approach the credit provider for the re-arrangement of the debt, which may involve extending the repayment period resulting in a reduced installment. It is important for these arrangements to be made by the consumer. Do not remain quiet and hope that the debt will go away \u2013 it will not disappear and you are merely aggravating the situation which may lead to legal action being taken against you by the credit provider.\n

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Summary<\/h5><\/div>
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What is Over-Indebtedness?<\/h5><\/div>
A consumer is considered over-indebted when available information shows that they are, or will be, unable to meet all their debt obligations in a timely manner.\n

\nFactors that may indicate over-indebtedness include<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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  • <\/span>Your financial means, prospects and obligations<\/li>
  • <\/span>Your debt repayment history, including missed or delayed payments<\/li><\/ul><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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    Before Entering into a Loan Agreement<\/h5><\/div>
    As a consumer, you must:<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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    • <\/span>Understand and accept the risks, costs, and obligations of the loan<\/li>
    • <\/span>Provide an honest debt repayment history (credit providers will check credit bureaus like Compuscan or TransUnion ITC)<\/li>
    • <\/span>Carefully consider your current financial situation before taking on more debt<\/li><\/ul><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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      Can I Afford the Credit?<\/h5><\/div>
      Before applying for a loan, you should independently assess your affordability:\n

      \n\n1. Review your last 3 months\u2019 bank statements and salary slips.\n
      \n2. List all your current expenses (see categories below).\n
      \n3. Subtract total expenses from your income to calculate what\u2019s available to service a new loan.\n
      \n4. Use the affordability rule of thumb:\n
      - The repayment should not exceed 50% of your net income, or\n
      \n - 1\/3 of your gross income\u2014whichever is less.<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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      Monthly Expenses to Include in Your Assessment<\/h5><\/div>
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      • <\/span>Housing (mortgage or rent) <\/li>
      • <\/span>Credit instalments (e.g. vehicles, store cards) <\/li>
      • <\/span>Transport (fuel, maintenance) <\/li>
      • <\/span>Groceries <\/li>
      • <\/span>School fees and education <\/li>
      • <\/span>Medical expenses <\/li>
      • <\/span>Utilities (water, electricity, rates and taxes) <\/li>
      • <\/span> Insurance policies <\/li>
      • <\/span>Domestic worker wages <\/li>
      • <\/span>Child support or maintenance <\/li>
      • <\/span>Subscriptions (e.g. DSTV) <\/li>
      • <\/span>Existing debit orders<\/li><\/ul><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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        <\/h5><\/div>
        Consumers must accurately disclose all monthly financial obligations when applying for a loan. This ensures a realistic affordability assessment and avoids future financial stress.\n

        \n\nIf your financial situation changes and you\u2019re struggling to meet your monthly instalments:<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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        • <\/span>Act immediately\u2014approach your credit provider to renegotiate the terms<\/li>
        • <\/span>Options may include restructuring the loan to lower the monthly instalment by extending the loan term<\/li>
        • <\/span>Don\u2019t stay silent\u2014avoiding the issue will only worsen the situation and may lead to legal action<\/li><\/ul><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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          In conclusion<\/h5><\/div>
          Always borrow in a responsible way and do not take credit that you cannot afford:\n\nOnly borrow what you can realistically afford to repay. Taking on unaffordable credit can lead to over-indebtedness, financial stress, and damage to your credit record.<\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

          What Does It Mean to Me As A Consumer To buy or not to buy, that is the question. Consumers requiring finance generally have two options available, i.e. saving-up or<\/p>\n","protected":false},"author":1,"featured_media":1171,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_EventAllDay":false,"_EventTimezone":"","_EventStartDate":"","_EventEndDate":"","_EventStartDateUTC":"","_EventEndDateUTC":"","_EventShowMap":false,"_EventShowMapLink":false,"_EventURL":"","_EventCost":"","_EventCostDescription":"","_EventCurrencySymbol":"","_EventCurrencyCode":"","_EventCurrencyPosition":"","_EventDateTimeSeparator":"","_EventTimeRangeSeparator":"","_EventOrganizerID":[],"_EventVenueID":[],"_OrganizerEmail":"","_OrganizerPhone":"","_OrganizerWebsite":"","_VenueAddress":"","_VenueCity":"","_VenueCountry":"","_VenueProvince":"","_VenueState":"","_VenueZip":"","_VenuePhone":"","_VenueURL":"","_VenueStateProvince":"","_VenueLat":"","_VenueLng":"","_VenueShowMap":false,"_VenueShowMapLink":false,"footnotes":""},"categories":[430],"tags":[],"class_list":["post-1170","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-micro-lending-credit-agreement"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1170","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/comments?post=1170"}],"version-history":[{"count":7,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1170\/revisions"}],"predecessor-version":[{"id":35686,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/posts\/1170\/revisions\/35686"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/media\/1171"}],"wp:attachment":[{"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/media?parent=1170"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/categories?post=1170"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.namfisa.com.na\/educates\/wp-json\/wp\/v2\/tags?post=1170"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}