Loan Burden a Harsh Reality for Many Jamaicans

Debt consolidation grows as borrowers aim to ease financial burden

BY CAMILO THAME Business Coordinator, January 15, 2012

Are multiple loans and credit card bills getting too costly to manage?  Maybe it's time to consolidate your debt. Over the last two years, the value of debt that has been consolidated — multiple loans wrapped into one — have grown significantly. It doubled in the first nine months of 2011 to $3.8 billion when compared to the same period in 2010. Also, in 2010, it was 40 per cent higher than the year before.

The primary benefits of debt consolidation are lower monthly repayment amounts, lower interest rates, payment to one versus several lenders and the intangible but critical peace of mind derived from getting your finances under control.

National Commercial Bank (NCB) says that while the root cause of the current economic climate is not easily identifiable, "there are certain common causes of financial distress on the Jamaican family that we see in the bank every day".

"Some challenges are outside the control of our customers such as job loss, slowdown in sales resulting in reduced income and an influx of unavoidable expenses like medical emergencies and those experienced during the back-to–school and hurricane seasons," said the bank in response to Sunday Finance questions. "Others are self- imposed, such as poor credit card management, irrational spending decisions and high interest rate loans from unregulated lenders. Whatever the reason, NCB seeks to counsel our customers on healthy banking practices, consolidate their expenses and set them on the right track to becoming financially fit."

Either way, banks are open to finding ways to accommodate debtors who are having difficulty repaying their debt. Particularly, since non-performing loans — loans left unserviced for over three months — have doubled to $19.8 billion over the two years to September 2011.

"What is most important is that our customers know they are not alone," said NCB. In order to consolidate one's debts, you must prepare documentation of all the debts to be consolidated and then contact your bank. This documentation should include details of the current monthly payment, current outstanding balances and the account status. With this information, the bank can explore options for a new loan package (rate, tenure and monthly payment) that can be comfortably accommodated.




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