For the Middle Class<\/strong> (personal income of R15,000), the average instalment-to-net income ratio rises to 56%.<\/strong><\/p>\n\n\n\n For the Heavy Hitters<\/strong> (top 5% of income earners), <\/strong>this rises to 63%.<\/strong><\/p>\n\n\n\n “These figures appear significantly elevated compared to other benchmarks,” said Eighty20. “Using a median calculation makes the situation look slightly more manageable.”<\/p>\n\n\n\n “In a significantly unequal country like South Africa, we believe the median is more insightful because a small percentage of the population earns significantly more than the majority.”<\/p>\n\n\n <\/p>\n\n\n\n The Heavy Hitters<\/strong><\/p>\n\n\n\n The wealthiest South African segment in the country with the most assets and is predominantly male.<\/p>\n\n\n\n Despite accounting for less than 10% of the total population, this income group holds two-thirds of vehicle asset finance (VAF) loans and three-quarters of home loans by value. <\/p>\n\n\n\n “The segment is diverse in income, with some members just above middle-class earnings, while others receive multi-million-rand salaries,” said Eighty20.<\/p>\n\n\n\n “For this analysis, a monthly salary of R42,100 was used. In this example of a typical Heavy Hitter, debt repayments by median calculation account for 66% of net income, with two-thirds of their debt secured.” <\/p>\n\n\n The Middle-Class Workers<\/strong><\/p>\n\n\n\n This segment is predominantly made up of married couples looking for a middle-class lifestyle, who often juggle car and home loans with their child’s education costs. <\/p>\n\n\n\n Many of these households are dual-income with substantial debt repayments. <\/p>\n\n\n\n This group holds roughly 30% of all home and vehicle asset finance (VAF) loans in South Africa but accounts for only 20% of the total loan value. <\/p>\n\n\n\n “On average, middle-class Workers allocate about 56% of their net income (income after tax) to debt repayments.”<\/p>\n\n\n\n “However, in a typical scenario illustrated below, the median instalment-to-income ratio is closer to 53%.” <\/p>\n\n\n The Mass Credit Market<\/strong><\/p>\n\n\n\n The Mass Credit Market segment consists primarily of South Africans earning less than R10,000 per month and mostly women working as entry-level nurses, teachers, and administrative staff.<\/p>\n\n\n\n Roughly 80% of this group holds retail store accounts, while the other 17% have credit cards. <\/p>\n\n\n\n Household income is usually twice one personal income, with nearly a quarter receiving grants and almost half being single parents. <\/p>\n\n\n\n “In our example, an individual in this segment, earning a gross monthly income of R4,900 per month, falling below the tax threshold, has debt instalments totalling R782 per month\u2014mostly retail store card debt,” said Eighty20<\/p>\n\n\n\n “The median instalment-to-income ratio for this segment is approximately 16%, whereas the average ratio is around 30%.” <\/p>\n\n\n
“This could either reflect potential data or modelling inaccuracies or indicate a broader issue with high debt burdens among South Africans.<\/p>\n\n\n\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/07\/Difference-in-Median-vs-Average-Instalment-to-Income.jpg\")
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