Unlawful And Prohibited Credit Agreements

The new structure for the cost of credit will work better for the largest credit advances of more than R8,000. The cost of loans for contracts under R1000 is comparable to 30% per month, with no interest rate limit calculated for small loans, the vast majority of microcredit borrowers come from low-income groups. The poorest households bear the heaviest burden of debt servient. It is therefore likely that low-income people and communities that borrow small amounts will continue to suffer from the devastating socio-economic difficulties mentioned above, contributing to the persistence of poverty. The maximum introductory commission in the form of settlements is R150 by credit contract, plus ten percent of the contract amount of more than 1,000 R1, but never more than 1,000 R1,000. In addition, the initiation fee must never exceed 15% of the main debt. The crucial role of credit in the economy is explained in the policy framework of the Ministry of Trade and Industry of August 2004: (ii) for the period from the time the consumer paid the money to the lender until the day the money is repaid to the consumer.” In the case of pawnshops, the loan is paid and the borrower provides collateral assets with a resale value greater than the credit. The creditor has the right to sell the property if the money is not repaid on an agreed date and to retain the proceeds of the sale. Before entering into a credit contract, the lender must provide the consumer with a free declaration and offer in the form prescribed by the regulation (form 20 of the settlement, for small credit contracts).

No agreement has been reached at this stage; the consumer is not obliged to sign or pay a tax. This is a new evolution of the law that aims to protect consumers. This document should contain the financial details of the proposed agreement (for example. B the amount of credit provided, the number and amount of payments, interest and other fees, payment required and credit insurance). Consumers must accept or reject the offer within five days to allow them to purchase for better or cheaper credits. Once the offer is accepted by the consumer, the credit contract can be concluded on its own. With respect to the NCA, it must be deferred for an agreement, a credit contract, money loans, the payment of an amount owed by one person to another person, and the interest that is collected, since interest is the cost of the loan lien. The NCA is applicable to any credit contract concluded or effective in South Africa, provided there is no exclusion. Section 90 lists many provisions of credit contracts (unlike all agreements[9]) that are illegal and inadmissible. There are too many of them to make the list. The list is broad and extensive; Many of these provisions are likely to be open to a wide range of interpretations, which should lead to uncertainty.

For example, a provision is illegal if its general purpose or general effect is to enslave the purposes or directives of the law or to “mislead” the consumer. In addition, a provision is illegal It has been argued that consumers are often responsible for their over-indebtedness by borrowing too much money or buying too much credit. This is usually the result of economic despair and a lack of understanding of the difficulties in repaying or serving their debts.