The National Credit Regulator (NCR) advise consumers to get savvy and that they should ask creditors for a detailed quotation before accepting credit. Further they recommend thinking about the offer rather than just signing it automatically.
The NCR say that many consumers ” fail to grasp the important details” before adding their signatures to important and binding documents.
This was a huge problem in the past. One that the National Credit Act sought to set right by requiring that contracts be understandable, in simple language (and available in the language of the consumer where possible/reasonable).
However even with improvements brought about by the NCA the NCR are still concerned that consumers are not taking the time to consider the cost of credit before making use of it.
The NCR’s Lebogang Selibi says this has led to many South Africans taking on more debt than they can actually afford.
Mz. Selibi says than when opening a credit account or taking a loan there could be a credit insurance cost added to the cost of the credit , as well as, a once-off initiation fee at a maximum of 15 percent of the principal debt, not to mention a charge of R57 (incl VAT) as a service charge on the account. All these added fees should be taken into account.
I would advise consumers to ask for what we call a â€˜pre-agreement statement and quotation’. ” I’s important for people to know what the true cost of their credit is”
A Quotation or Pre Agreement would include the cost of credit interest, the amount of money being borrowed, services and initiation fees. The Pre Agreement should also set out the credits term and conditions.
“You can take these documents home and actually have a look before you go back and sign a credit agreement. So a pre-agreement statement and quotation are very important for consumers,” she said.
Not a bad idea when making an important decision such as taking out a loan or buying an item on credit.
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