How to be a smarter borrower

Many South Africans will begin the new year deep in debt because of the temptations of the festive season.

Nomsa Motshegare, CEO of the National Credit Regulator, warns: “Before consumers sign credit agreements, they need to understand the cost of credit and the terms and conditions of different credit agreements.” She has this advice on how to be a more careful borrower:

Only borrow the amount you absolutely need;

Be selective about what you borrow for: education and a housing bond are good reasons, but groceries, holidays and designer clothes are not;

Work out how much you can afford each month for repayments before you apply for credit;

Never sign a blank credit agreement; Never leave your ID with lenders — reputable lenders will not require this;

The National Credit Act allows for a five-day cooling-off period only if credit agreements are not signed at the credit provider’s premises, so be very sure before signing anything;

Pay the full amount you owe on time every month; and

If things are tight, pay your home loan first.