Your Loan Application is Influenced by These 5 Things

Everything that we need nowadays is at our fingertips and loans are no different. You can apply for a loan in just a few minutes online and from anywhere at any time. 

Even though the process seems to be simple and convenient, you will only be granted a personal loan if you satisfy the qualification criteria. If you do, then you could have your personal loan in your bank account within 24 hours. 

There are several factors involved as to whether your personal loan will be approved or not. Here are the 5 things that will influence your loan application. 

Paying Your Debts on Time

When you pay your debts on time it shows that you can manage your debts and could be in a position to take on credit. If you are late with payments or if you miss payments, then the loan provider may see that you are struggling to make ends meet. This could lead to your loan application being rejected as the loan provider sees you as a risk and you can’t handle any more debt. 

A Large Chunk of Your Current Debt is Paid Off

When you are applying for more credit it is better to have a large chunk of your debt paid off than having a large amount still outstanding. If you are carrying a lot of debt, then you should consider paying this off first before you try and get more credit. 

You Have All the Documents

When you are applying for a loan you will need to have supporting documents ready. A loan provider will need to verify your income and what your expenses are to determine your affordability. You will then need to have payslips, bank statements and your ID book ready. 

You Don’t Have Judgements Against You

A loan provider will check your credit history and will see if there are any serious judgements or defaults against your name. If you do have these then you might be rejected instantly for your loan application. 

You Haven’t Been Rejected for Credit Before

If you haven’t been rejected for credit before then it shows that you have a good credit history and is another positive factor when it comes to your loan application. 

Eskom Wants a Clawback of R27 Billion from Consumers

Last week, Nersa published an application for public comment from Eskom in terms of the Regulatory Clearing Account (RCA) methodology. Originally, Nersa allowed Eskom to recover costs from electricity tariffs to the tune of R86 billion, but Eskom maintains that is allowed to recover R99.6 billion. 

Stakeholders will have until January 20thto submit a written response to the applications according to the published timelines. In February, Nersa will also be holding public hearings on the matter in all 9 provinces and the decision is set to be announced by March 24thnext year. 

The current application is not expected to impact the electricity tariffs for next year as the announcement from Nersa will come too late to be incorporated in the upcoming tariff increase, which occurs on April 1stfor Eskom direct clients and July 1stfor municipalities. 

However, Eskom is proposing that the amount Nersa awards should be added to electricity tariffs in 2020/21 and 2021/22. This means that if Nersa does award Eskom the full R27.2 billion and divides it over the two years in 2021/22 and 2022/23 that the expected increase in April 2021 will go from 5.01% to 11.38%.

In court, Eskom is challenging 5 different tariff determinations by Nersa, which includes the original decision for 2018/19 that resulted in the uncertainty over the future price path of electricity. Eskom is also arguing that they were short-changed by Nersa by at least R100 billion and is asking the court to order a clawback of at least R69 billion. 

If the first application does succeed, then it could mean that next year tariffs could increase by 16.6% instead of the 8.1% as it stands. 

If the other applications from Eskom succeed, then the court might choose to refer the matters back to Nersa for redetermination. If this happens then it will further delay any price certainty. 

The current application that’s arguing for clawback from Eskom relies mainly on lower than expected sales volumes and higher than expected coal costs.

Eskom is claiming an additional R5.4 billion due to reduced sales after lost income is taken away because of lower sales due to load shedding. This is blamed mainly on the struggling economy. Eskom says in its application that the most affected customer groups are mines, households and municipalities.

At municipality level, the largest loss was in KwaZulu-Natal where 574 GWh in sales were lost due to Richard Bay alloys closing two furnaces and Karbochem having to downscale. In the mining industry, sales were reduced by 1125 GWh mainly in the gold sector, which meant the coal mine, the Gupta-linked Optimum mine was sent into business rescue. 

On top of this Eskom is also claiming R16.7 billion in additional revenue for primary energy mostly related to coal. 

Eskom also applied for R48.6 billion in coal burn costs, but Nersa only approved R39.1 billion, which has been highly criticised by the power utility as the actual cost was R51.5 billion.

Eskom says that Nersa did not take into account the current coal purchase agreement that Eskom is bound to and based its determination on a theoretical index that also fails to take coal industry dynamics into account. 

Eskom is additionally claiming R4.8 billion for variance in other costs that largely consist of depreciation and employee costs. Nersa allowed for R24.3 billion for employee costs, but this only served 32 954 staff members. This would then mean that Eskom would have to cut 6323 staff numbers in just one month of the announcement. 

Eskom argues that they are bound by collective bargaining agreements and a reduction would mean time-consuming and extensive negotiations with unions and extra costs in the form of severance packages. 

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