Sharp rise in lending by cash strapped consumers and move to second hand buying
Alan Anstey, General Manager Operations of Cash Converters South Africa, says 2016 has seen a sharp increase in activity levels at their buy shops country-wide.
“Our buy shops, where we buy products from consumers, and our Cash Advance option, where we loan money to consumers against their goods and valuables, have shown a 20% exponential increase from 1 January to date when compared to the same period last year,” says Anstey.
Anstey says on the Cash Advance side there is a definite need to try and free up cash in a safe environment and pawning assets for cash answers the immediate need for disposable cash, particularly at a time when banks are becoming even more stringent on granting personal loans.
Traditionally there is a slight spike in January but the current increases are much higher than normal, indicative of just how cash strapped consumers are feeling. “We can see that fluctuations in the Rand are disproportionally increasing the cost of many landed products this year and this is being reflected in an increase in retail prices. We are fortunate in that we are well placed to offer a wide selection of quality second hand goods, particularly electronic goods, still at an affordable price. Interestingly, there seems to be a growing trend of ‘upgrading early’ this year, particularly on items like televisions and flat screens. These naturally attract a higher price in the buy shop and allow the consumer to upgrade with the cash we pay them.”
Consumers are also cashing in on the discounts available if one buys and purchases in a single transaction. “We believe as interest rates increase and prices generally escalate consumers are going to find products that were semi affordable last year becoming simply unaffordable this year and there will be a move from new to quality second hand options.”