Unsecured credit

Capitec reduces the cost of unsecured credit

Through Journalist October 31, 2017

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DURBAN – Capitec Bank offers enhanced credit accessibility that provides personalized unsecured credit to eligible applicants at the same costs as secured loans.

This offer is a first of its kind and will revolutionize credit in South Africa.

The model uses big data, multiple regression models, and novel machine learning techniques to properly assess applicants’ creditworthiness through rigorous examination of their unique financial behavior.

This translates into better credit offers and lower interest rates tailored to a person’s needs and credit profile.

The new metrics include traditional data points such as disposable income and cash flow, as well as candidate spending and saving behavior, lifestyle choices and income streams. Applicants who are lower risk and can bank intelligently are eligible for unsecured loans of up to R250,000. The loan would be for a period of 4 years with interest rates as low as $ 12,000. 75% / premium +3.

Capitec Bank CEO Gerrie Fourie said they have evolved their competitive credit offering to attract people who base their credit choices on the full amount, monthly payment and now the lowest interest rates.

Unsecured can rejuvenate a stagnant economy

An econometric analysis was performed to show the relationship between unsecured credit and GDP in 2014.

Analysis
was conducted by Dr Ilse Botha from the University of Johannesburg and Dr Roelof Botha from the Gordon Institute of Business Science.

According to Dr Roelof Botha, the study showed that unsecured credit plays a vital role in revitalizing a stagnant economy.

The model showed a positive relationship between the growth of unsecured credit and the rate at which the South African economy recovered from the 2008/2009 recession.

A lifeline for many asset-poor South Africans

A 2016 UCT Unilever Institute study found that unsecured credit is often the only way people can access capital to improve their lives.

The study found that the majority of South Africans are still part of the upper middle class and use unsecured loans as a way to overcome South Africa’s extensive economic and educational crisis.

– ONLINE ACTIVITY REPORT


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