News 2007  : The National Credit Act

01 09 2007The National Credit Act

According to the Banking Association of South Africa, the National Credit Act is being implemented to:
- Help prevent consumers from borrowing more than they can afford
- Ensure credit providers lend responsibly
-Regulate the granting of credit through the National Credit Regulator; a National Consumer Tribunal and a debt-counselling service;

Help educate consumers about making informed decisions about borrowing.
the Act applies to credit cards,overdrafts, mortgages, instalment agreements, leases and microloans.

Applying for credit under the Act will involve the following:

-All consumers applying for credit will receive a quotation from the credit lender;
-All quotations must disclose full costs of the credit applied for - including all credit facility management fees - in short, just how much a loan will cost you at the end of the day;
- The quotation applies to the credit provider for five days, during which time the consumer can get quotes from competitors;
- The consumer needs to provide the correct information to the lender so they can perform a credit assessment;
- Records of credit agreements will be sent to the Credit Bureau;
- Credit providers need to keep records of all credit applications;
- For couples married in community of property, the Act requires written consent from one spouse when the other applies for credit.

The Act also aims to protect consumers from misleading advertising - so phrases such as ''no credit checks'', '' free credit'' , and ''guaranteed loans'' cannot be used.
Credit agreement information must be understandable, so it should become available to consumers in local languages other than English. Consumers will be entitled to a credit report once a year, in the month of their birth.
Chris Needham - Sunday Times 27 May 2007.

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