The National Credit Act and the Consumer Protection Act aim to make credit lending and services provided to consumers fair towards the service provider as well as the consumer. There is often focussed on the advantages of the National Credit Act for consumers, but it also protects creditors.
In this article we look at the important point of the NCA that consumers have to familiarize themselves with to ensure that creditors, debt collectors and banks act within the law. You can download the NCA here.
Contracts should be in plain language
When you sign a contract or a credit agreement it must be in simple, or also called plain, language. This is not a “dumbed down” form of English, but it doesn’t use jargon and it’s to the point and understandable to someone who isn’t professionally trained in the field of the subject.
This is important as you have to know what you’re signing up for and what the terms of your contract are in the fine print. Beware of creditors who try to encourage you to skim over the fine print or don’t have their contracts in plain language.
Quotes must be given on all credit agreements
You have to know how much you will be paying. Even in advertising all prescribed costs have to be set out. Automatic increases in interest and fees are also regulated and credit “products” have regulations as well to keep credit providers from making products available that won’t be in the best interest of their clients in the long run.
You can shop around for quotes on credit products, but because of the regulations most credit providers have similar products and one should be weary if something looks too good to be true as it might be illegal. Loan sharks prey on over indebted people, low income earners and those who don’t have the best background to make sound financial decisions. The National Credit Act wants to protect South Africans from these unscrupulous lenders.
Reckless lending is also against the NCA. Lending is “reckless” when a credit provider doesn’t do a credit check to ensure that a borrower can in fact afford to pay back their credit or when lenders charge sky high interest rates or penalty fees.
You have the right to apply for debt review
The NCA gave birth to the National Credit Regulator and one of the tasks of the NCR is to ensure that people who cannot afford their debt gets the help of a professional debt counsellor at an affordable fee. Debt review applications are simple to fill on and once you have been approved for debt review your debt counsellor will restructure your credit so you can afford your debt, cost of living, and other expenses.
The NCA encourages transparent lending overall and for consumers to be able to have access to trustworthy debt help if they find themselves financially overcommitted. Don’t hesitate to protect your rights: Ask for readable contracts, insist on transparent credit lending and apply for debt review when you cannot afford your debt.