- Title
- An analysis of the credit scoring tool implemented by South African banks for vehicle asset financing
- Creator
- Ntsingila, Themba
- Subject
- Credit scoring systems
- Subject
- Consumer credit
- Subject
- Credit -- Management
- Date Issued
- 2024-12
- Date
- 2024-12
- Type
- Master's theses
- Type
- text
- Identifier
- http://hdl.handle.net/10948/69972
- Identifier
- vital:78254
- Description
- South Africa has been experiencing an increase in the number of people buying motor vehicles for primary reason of travelling from home to work and vice versa over the past years. However, there has been also an increase in the number of bad debts written off (bank repossessions) for vehicle asset financed through by the financial institutions. The risk that borrowers are not fulfilling their obligations present a huge risk to the bank as borrowing has become the leading function of the bank. This is proven by the volumes of different loans granted by banks to individuals (Kihuro and Iraya, 2018). Hartungi (2007:397) alludes that low-income earners tend to buy expensive motor vehicle which they cannot afford. It has been noted that the increased level of consumer’s indebtedness is due to unstable economy, frequent increase of petrol prices and interest rates increases. Vehicle financing face a higher probability of customers defaulting. The trend in the increase of the household credit granting became a concern for the South African government which led to the execution of the National credit act (NCA) on 1 June 2007 in a move to regulate the act particularly to protect the household in acquiring unnecessary credit. Companies are required to explore different ways of assisting their customers by reducing the high number of debts written off for motor vehicles. This study used the quantitative approach using the survey method to collect data from respondents who are credit managers in a bank based in Gauteng province. Data collection took place in a bank using a questionpro survey distributed by email to junior credit managers, credit managers and senior credit managers to administer an open-ended questionnaire. Responses received were codified and quantitative data was analysed using Statistical tools and packages including Statistica. This research aims to assist the financial institution(s) by performing better assessment in granting of credit for asset finance and by reducing several bad debts. It is the main aim of this academic exercise to bring to the fore the scholastic analysis to further enlighten the reader about the burden of reckless lending not only to individuals who are granted credit but also the approved financial institutions themselves. The study found variable respondents’ opinion of the analysis of the credit scoring tool used. In conclusion, is perceived that the use of correct credit scoring tool will reduce the number of bad debts written off. It can be recommended that a National Credit Act intervention could be applied to mitigate the risk of defaulting in credit assessment for loans granted to consumers. Therefore, the study seeks to first look at the credit scoring tool as a viable and relevant tool used for Vehicle Asset Financing (VAF) in the banking sector, and secondly attempt to provide novel ways to improve and enhance the current system with the sole aim to align with National Credit Regulator (NCR).
- Description
- Thesis (MBA) -- Faculty of Business and Economic Sciences, Business School, 2024
- Format
- computer
- Format
- online resource
- Format
- application/pdf
- Format
- 1 online resource (151 pages)
- Format
- Publisher
- Nelson Mandela University
- Publisher
- Faculty of Business and Economic Sciences
- Language
- English
- Rights
- Nelson Mandela University
- Rights
- All Rights Reserved
- Rights
- Open Access
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- Downloads: 2
Collections
NMU Business School
| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | SOURCE1 | NTSINGILA, T.pdf | 1 MB | Adobe Acrobat PDF | View Details Download |