Are you one of the 1.6 million South Africans that banks prefer to lend money to?

A new report by consumer credit reporting group Experian, provides a breakdown of consumer debt in South Africa, including which types of debt carry the highest risk in the country – and how much money is owed to lenders.

The inaugural Experian Consumer Default Index (CDI), which launched this week, showed that R13.45 billion in consumer debt across home loan, vehicle loan, credit card accounts defaulted for the first time between May and June 2017.

The Experian CDI measures the rate of first-time default of 14.7 million consumers across 18.4 million active home loan, vehicle loan, personal loan and credit card accounts with R1.54 trillion in total outstanding debt.

The CDI represents the percent of never-defaulted balances that have defaulted in the three month period under review.

The index pointed to an overall improvement in debt levels between 2016 and 2017, indicating the rate of first time credit default is slower than the previous year – however, the group noted that this could be indicative of the recent slowdown in credit extension.

In its research, the group highlighted two population groups that have the best, and worst debt-handling profiles – each representing small portions of the population, and the two extremes of debt.

On the bottom-end, are what Experian calls “indigent township families”, who saw a large increase in first-time debt default; while the top-end – the “hard-working money” segment – saw its debt default numbers improve.

This is how they compare:

Indigent township families

• Represent 3.86% of the population (approximately 2.2 million people)
• Aged 25 to 29
• Limited education beyond grade 12
• Earn less than R38,200 annual household income
• Stay in rented informal dwellings
• From Mpumalanga or Limpopo
• CDI deteriorated from 7.13% to 8.15%

“Earning low incomes, they are reliant on unsecured lending to finance their existence and could be lacking financial literacy to manage the debt,” Experian said.

Hard-working money

• Represent 2.83% of the population (approximately 1.6 million people)
• Aged 35 to 49
• Educated beyond grade 12
• Earn in excess of R150,000 annual household income
• Stay in houses that are not yet paid off, in suburbs around industrial and mining areas
• From the Western Cape or Gauteng
• CDI improved from 3.13% to 2.99%

This particular segment has a debt exposure of R203.25 billion as at June 2017, Experian said.

Riskiest debt

According to David Coleman, chief data officer at Experian, “When looking at the default rates from a product class perspective, the CDI highlights a clear differentiation between more risky, unsecured lending asset classes as opposed to less risky, secured lending products.”

Personal loans, which represent the riskiest asset class, had the highest CDI of 8.54% compared to all other product types.

This product recorded R5.12 billion in new defaults over the period May to July 2017. The other unsecured asset class, namely credit card, recorded the second highest CDI of 6.91%, but improved year-on- year from the 7.32% peak experienced in July 2016.

Vehicle loans was the only product class where the rate of default increased year-on- year at 3.13% from July 2016’s 2.85% and could be linked to the decline in vehicle sales.

The CDI for Home Loans remained virtually unchanged at 1.84% in July 2017.

Read: For every R100 you earn – R72 is going to debt: survey