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Although a trader`s main activity may not focus on the provision of credit to consumers, an agreement may still constitute secondary credit if such an agreement falls within the scope of the NCA. The law uses the non-sexist term “ombudsman” (often referred to as ombudsman). The law provides that certain disputes between a financial institution (such as a bank) and a consumer arising from a credit agreement may be submitted to the competent ombudsman. The Ombudsman then acts as an intermediary between the institution and the consumer responsible for lodging a complaint. Even if a consumer is in default under a credit agreement and the creditor has already initiated debt recovery proceedings, that agreement cannot be subject to a debt assessment. This could encourage lenders to start debt collection proceedings earlier than they would otherwise have done. In terms of secured loans, the money is paid and the lender receives a pledge of movable property or something else of value as collateral for the repayment of the loan. Secured bank loans, credit card accounts or chequing accounts fall under the category of “credit facilities”. The maximum interest rate is also linked to the redemption rate of SARB Bank and is currently 29.8% per year. A fairer outcome could be achieved by eliminating or lowering trigger and service charges, lowering the maximum allowable interest rate and reducing the maximum amount of short-term credit transactions. This requires amendments to the Rules of Procedure.

It will be extremely difficult for consumers to find the money to pay the start-up costs in advance at the time they take out a loan, precisely because they need the money. Most lenders will therefore not be able to afford to pay the start-up costs to take out a loan, especially in the case of very poor borrowing for consumer purposes. These individuals will therefore be obliged to allow the start-up costs to be capitalized and repaid, probably in as many installments as the initial loan and at the same interest rate as the initial loan. The result will be that the actual monthly cost of borrowing will increase. Before entering into a credit agreement, the creditor must submit to the consumer, free of charge, a declaration and an offer in the form prescribed by the rules (Form 20 of the Regulation, in the case of small credit agreements). No agreement will be reached at this time; The consumer does not have to sign or pay any fees. This is a new evolution of the law to protect consumers. This document must include the financial details of the proposed agreement (such as the amount of credit granted, the number and amount of payments payable, interest and other fees, the deposit required and credit insurance). Consumers must accept or reject the offer within five days to give them the opportunity to seek better or cheaper loans. Once the consumer has accepted the offer, the credit agreement can be concluded himself. `It is presumed that the parties to an ancillary credit agreement have entered into this agreement on the day which is 20 working days thereafter. A credit bureau is a company responsible for paying to receive reports or investigate loan applications and agreements, payment history or patterns, and other consumer credit information.

Credit agencies are also in business to compile and maintain data and create consumer reports based on that data. As noted above, credit bureaus were required to register with the NCR by July 28, 2006. Credit agencies support credit providers with information that could prevent consumers from over-indebtedness and making reckless loans. If a loan agreement is found to be illegal, a court must order everyone to be entitled to free information from the credit bureau once a year. After that, it costs R20 per request. Two main credit bureaus with telephone numbers are: • ITC — 086 148 2482 (Website: • Experian — 086 110 5665 (Website: This provision helps prevent lenders from taking shortcuts by simply taking apparently solvent debtors at face value. A lender can use its own valuation mechanisms, as long as they are fair and objective. The consumer, in turn, must provide the requested information in a complete and truthful manner. The consumer`s failure to do so could provide the lender with a full defense against the allegation of reckless lending. The Act contains detailed provisions on bank statements. The Regulation prescribes the form and content of declarations for small agreements.

Credit providers must provide consumers with regular bank statements, usually once a month (but once every two months for installment purchase agreements). The crucial role of credit in the economy is explained in the policy framework of the Ministry of Trade and Industry of August 2004: with regard to a credit guarantee, a third party undertakes to pay a creditor the amount due by a consumer upon request (as for example, in the case of a guarantee in which a personal guarantee is provided for the debts of another person from an overdrawn checking account). .

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