How to bor­row re­spon­si­bly

Grocott's Mail - - ECONOMIX - STAFF RE­PORTER

The fes­tive sea­son has come and gone, leav­ing many in a des­per­ate po­si­tion. Not hav­ing planned for the New Year, they find them­selves hav­ing to bor­row for es­sen­tials such as school uni­form, reg­is­tra­tion fees, sta­tionery, trans­port money and food.

Out of des­per­a­tion, these con­sumers might bor­row reck­lessly and from un­reg­is­tered credit providers, said Mpho Rama­pala, ed­u­ca­tion and com­mu­ni­ca­tion man­ager at the Na­tional Credit Reg­u­la­tor (NCR). Rama­pala said con­sumers should only bor­row from reg­is­tered credit providers. They should plan in ad­vance how to re­pay the loans. Most im­por­tant, they should de­ter­mine whether they can af­ford the re­pay­ments. Credit providers also have an obli­ga­tion to con­duct an af­ford­abil­ity as­sess­ment be­fore grant­ing credit. If you're think­ing of bor­row­ing to get out of a fix, the Na­tional Credit Reg­u­la­tor (NCR) says you must be sure to ask for a quote. The Na­tional Credit Act (NCA) al­lows you to be given a prea­gree­ment state­ment and quo­ta­tion. These out­line the terms and con­di­tions of the pro­posed agree­ment and all costs in­volved such as in­ter­est, monthly ser­vice fees, once off ini­ti­a­tion fees, credit in­sur­ance if there is any, a de­posit if re­quired, num­ber of in­stal­ments, date of first in­stal­ment, and last in­stal­ment etc. You can also use the quo­ta­tion to shop around for bet­ter deals. Also, you will know what is ex­pected of you be­fore you sign the credit agree­ment. In ad­di­tion, you will be aware of the cost of credit and the terms and con­di­tions be­fore you sign. Once you've signed the credit agree­ment, you're obliged to hon­our its terms and con­di­tions, in­clud­ing re­pay­ments.

Tips for bor­row­ing wisely:

• Bor­row as lit­tle money as pos­si­ble. Bor­row­ing to fund your chil­dren’s ed­u­ca­tion or a home loan can be a good thing, but bor­row­ing for con- sum­ables or to pay off other debt or to fund lux­u­ries such as hol­i­days or de­signer cloth­ing can con­demn you to a life­time of debt. Only bor­row for what you re­ally need. • Avoid pay­ing over too many months, as it will cost you more in the end. • If there is credit in­sur­ance, fa­mil­iarise your­self with the terms to avoid sur­prises when you most need cover. · Be hon­est: make sure that you dis­close all the in­for­ma­tion re­quired by the credit provider. Dis­hon­esty may cause you to lose the pro­tec­tion of­fered by the Na­tional Credit Act. • Cre­ate a monthly bud­get and stick to it. Work out how much in­come your fam­ily earns and what your to­tal ex­penses are each month. Will you be able to pay for your new debt once you’ve cov­ered all your ex­penses? You should also plan for un­ex­pected costs, such as if one of your fam­ily mem­bers is re­trenched. • Al­ways keep re­ceipts of your pay­ments, as you might need these in the fu­ture. • Never sign a blank credit agree­ment be­cause you won’t have con­trol over other in­for­ma­tion added af­ter­wards. • Al­ways in­clude sav­ings in your bud­get. • Pay your debts on time. Pay­ing late will ad­versely af­fect your credit re­port and pos­si­bly your abil­ity to take out credit in the fu­ture. If you think you can­not meet your monthly in­stal­ments, call your credit provider im­me­di­ately and try to re-ar­range pay­ments. Do not wait un­til you skip pay­ments. • Check your credit re­port reg­u­larly. This way you’ll be able to iden­tify any er­rors and cor­rect them.

Un­der the NCA, you are en­ti­tled to one free copy of your credit re­port each year at any other time, upon pay­ment of the in­spec­tion fee of the credit bureau if any.

For a com­pre­hen­sive list of reg­is­tered and can­celled or lapsed credit providers, visit the NCR’s web­site: www.ncr. org.za. For more in­for­ma­tion 0860 627 627 or email ncr.org.za. call

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