How the National Credit Act Helps You!

The National Credit Act (NCA), which was introduced in 2005, essentially serves two ends. It provides a consolidated set of rules that govern how credit is granted, reported and monitored. In addition, it also aims to prevent reckless lending and over-indebtedness, it regulates lending practices and established new and improved rights for all South African consumers.

Through the enforcing of these rights the National Credit Act ensures that transparency is guaranteed, unfair lending practices prevented, and the reckless granting of credit is avoided. Consumers who are heavily in debt are also assured of appropriate assistance while information and records held by credit bureaus are also regulated more tightly under the Act.

 

Here are some practical ways in which the National Credit Act protects you:

• No negative option marketing. This is when you are sent a product and if you do not return it within a stipulated time period you are deemed to have purchased it.
• You may not be visited by someone offering you credit, at home or at your workplace, unless you’ve expressly invited them yourself.
• A credit provider my not offer you (additional) credit without first ensuring that you are clear on the risks, costs and obligations of the proposed agreement.
• Your ability to meet additional financial obligations in a timely manner, in relation to other financial commitments and repayment history must also be clearly understood.
• The Act also provides you with greater authority when it comes to insurance, giving you the option of arranging your own insurance as opposed to just going with what is offered by the credit provider.
• All credit providers must be qualified and registered credit providers.
• You may not be pressured into signing an agreement. You have the right to a ‘cooling-off’ period of 5 days once you’ve received a full and transparent quotation for a product or service.
• Any quotation for a loan should include the principal debt, initiation fees, ongoing cost of credit and the yearly interest rate and also what type of rate it is.

When you enter into an Agreement, the following should be advised in the fine print regarding the loan:

• Installation, re connection, delivery, and registration fees, if applicable
• The nature, cost, fees, and remuneration of additional insurance policies you may sign together with your loan contract
• The administrative fees you may have to pay if you default on the loan
• The circumstances that you have to satisfy for your loan to be tagged as a default

 

Conclusion

The National Credit Act has made great strides in safe-guarding South Africans against reckless lending and irresponsible credit. The implementation of stricter regulations on credit providers has ensured that those needing to obtain credit are not taken advantage of.

As a South African consumer, you should remain vigilant regarding what exactly you are getting yourself into when applying for credit. Make sure that you thoughtfully read the entire credit agreement first, including the fine-print, and don’t shy away from asserting your rights as enshrined in the National Credit Act.

View the National Credit Act here.

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