Uh oh, I thought, this can’t be good news. She wants to leave.
I motioned Margaret to the table and we sat down. She clasped her hands together, with her head bent forward, and her l ips pursed tightly together. Eventually, she stammered: “I’m i n trouble.”
“Why, what’s wrong?” I asked, trying to reassure her.
She pulled out a folded sheet of paper and slammed it down on the table. “It’s too much,” she sighed, “It ’s just too much.”
I picked up the paper and studied it carefully. It was a credit agreement written up by one of the l arge f urniture retailers and signed by Margaret. She had purchased a R3 000 hi-f i set for Christmas and now had to pay it back in monthly l oan i nstalments. She was struggling to make ends meet.
I had a look at the terms of the loan and was more than a little shocked. The monthly repayment was a lot higher than I thought it would be. I crunched the numbers and worked out that the effective loan rate was in excess of 50% a year. Was this exorbitant rate even legal under the National Credit Act?
What really surprised me was that the interest rate quoted in the credit agreement was only about half what I had calculated. Was this a deliberate attempt to mislead an unsuspecting consumer? I read the agreement more closely and then discovered the reason for the disparity. The retailer had attached a credit life insurance policy on to the loan as well. So if Margaret were to pass away before the loan had been repaid, then the insurance company would cover the cost