Time to know your rights

STAY INFORMED: BE AWARE OF YOUR RESPONSIBILITIES REGARDING CREDIT AGREEMENTS It’s important not to ‘overuse’ your consumer rights.

March is Consumer Awareness Month and time to ensure you know your rights and responsibilities as a consumer, especially regarding credit agreements.

At a time when many consumers, no matter what they earn, are struggling to make ends meet, they are turning to credit to afford daily essentials.

March is also Human Rights Month.

“Consumer rights, according to the National Credit Act, are an essential part of broader human rights, but it is equally important to know what you are entitled to and what your responsibilities are when it comes to your credit agreements,” says Wikus Olivier, managing director at CreditSmart Financial Services.

“Remember, just because you have or are aware of a specific consumer right does not mean you must ‘overuse’ it. If you take on more debt, for example, and you know you cannot afford it, you are in for some serious trouble,” he adds.

Remember these basic consumer rights and responsibilities concerning credit obligations:

You have the right to:

Apply for credit; Receive information in plain and understandable language, including an official language that you can read and understand; Never put pen to paper if you do not fully understand the information or are uncertain about the content, fine print and terms and conditions;

Be informed when your credit application gets approved or denied. If it is rejected, ask why.

“If your credit request is declined due to your credit profile or score for example, you can ask for the credit bureau’s contact information to log a dispute,” says Olivier. The credit bureau has 20 business days to resolve your query;

Disclose your information; Never sign a blank credit agreement. Before you sign a contract, ask for a pre-agreement that is binding for five business days.

“This quotation should contain information such as the borrowed amount, interest amount, deposit amount (if required), repayment period and any additional charges,” says Olivier; and A pre-quote can help you to negotiate better interest rates or compare quotes and “shop around” for better deals.

South African consumers are all too thankful to be granted the first offer they can get when they could have perhaps received a better price from another registered provider, he adds;

The confidential treatment of your personal information;

“Credit providers should treat client information confidentially and should only use your information for the purposes for which you gave it”;

By law, you can receive a free credit report each year through a registered credit bureau and challenge any incorrect information. You may have to pay for more frequent copies;

Say no to reckless lending practices;

Credit providers must abide by proper affordability assessment guidelines at the time of your credit application;

Negotiate with your credit providers when you struggle to keep up with your payments, or seek professional assistance and apply for the recommended National Credit Regulator (NCR) programme for debt counselling or debt review;

Communication is crucial when it comes to your creditors. Be proactive and inform your creditors about a change in your circumstances;

If you have calculated your debt-to-income ratio and it reflects a red flag of over-indebtedness, consider debt counselling as a potential debt relief measure and solution; and

Remember you can request reasons if your debt counselling application is rejected.

Ask for a full disclosure of the process and written disclosure of fees applicable before your application. You should receive monthly statements from your debt counsellor or payment distribution agency during the process.

Olivier says although you have various rights regarding credit agreements, these are the responsibilities you have as a credit-active consumer:

Only use credit providers (and when you are over-indebted, a debt counsellor) registered with the NCR. Olivier says it is important never to leave your bank card, identity document, or bank pin with credit providers;

Ensure a complete and truthful financial disclosure when applying for new credit and be honest with yourself. Do some extra homework to ensure you can afford another financial obligation;

Make monthly payments as agreed or pay your balance in full each month, avoid unnecessary debt and use credit wisely to build a positive credit history;

If you realise you will not be able to meet your monthly obligations, contact your credit provider to try and re-arrange payments immediately; and

When you consider debt counselling as a debt relief measure, remember that you are still liable to pay your debt as it is not a quick fix or a debt cancellation process.

Regularly communicate with your debt counsellor and stick to your newly restructured payment plan according to the court order.

“Empower yourself by understanding your consumer rights and also ensure you fulfil your credit agreement responsibilities for a secure financial future,” says Olivier.