Bor­row wisely be­cause credit is ex­pen­sive

The Citizen (KZN) - - Business - Kedi­latile Le­godi When bor­row­ing money:

For some, there may be a need to bor­row money to take care of Jan­uary ex­penses, such as school fees, uni­form, trans­port and oth­ers. Con­sumers are re­minded that credit is ex­pen­sive, there­fore they should only bor­row when it is ab­so­lutely nec­es­sary to do so, and only from credit providers reg­is­tered with the Na­tional Credit Reg­u­la­tor (NCR).

Un­der­stand the to­tal cost of the credit you are ap­ply­ing for be­fore you sign on the dot­ted line. The cost of credit in­cludes in­ter­est, once off ini­ti­a­tion fees, monthly ser­vice fees, credit life in­surance, etc.

To un­der­stand the cost of credit, con­sumers should be given a pre-agree­ment state­ment and quo­ta­tion that dis­close the to­tal amount re­payable for the money bor­rowed, in­clu­sive of re­lated costs at the end of the re­pay­ment pe­riod.

These doc­u­ments are valid for five busi­ness days and in­tended to as­sist the con­sumer to shop around for bet­ter deals and make an in­formed de­ci­sion.

Ac­cord­ing to the Na­tional Credit Act (NCA), con­sumers have a right to re­ceive in­for­ma­tion in plain and un­der­stand­able lan­guage and to re­ceive rea­sons from the credit provider why their credit ap­pli­ca­tion may have been de­clined.

Con­sumers are fur­ther ad­vised to be cau­tious of the un­reg­is­tered credit providers and only bor­row money from NCR-reg­is­tered credit providers.

Un­reg­is­tered credit providers usu­ally charge ex­ces­sive in­ter­est rates that are not in line with the NCA, don’t con­duct af­ford­abil­ity as­sess­ments and use un­law­ful and pro­hib­ited tactics to col­lect on their debt, such as re­tain­ing con­sumers’ iden­tity doc­u­ments, bank cards/PIN num­bers, So­cial Se­cu­rity Agency cards and oth­ers.

It’s the con­sumer’s obli­ga­tion to be hon­est when ap­ply­ing for credit by dis­clos­ing all rel­e­vant and cor­rect in­for­ma­tion re­gard­ing their fi­nan­cial sta­tus.

Credit that is granted based on in­cor­rect fi­nan­cial dis­clo­sure may lead to in­abil­ity to re­pay the debt.

Never agree to pay up­front costs or fees. Many con­sumers are duped into pay­ing “ad­min fees”, “lawyer’s fees”, “re­lease fees” etc when bor­row­ing money from un­scrupu­lous, fake or un­law­ful en­ti­ties usu­ally found on­line. In most cases, con­sumers lose their money with­out get­ting what they bor­rowed;

Bor­row only when it’s nec­es­sary and avoid bor­row­ing money for con­sum­ables such as gro­ceries;

Do not sign a blank credit agree­ment or doc­u­ment. Read the con­tent first, un­der­stand, ask ques­tions and, when sat­is­fied, sign;

Con­sider credit in­surance. Fa­mil­iarise your­self with the terms of the credit in­surance to avoid sur­prises when you most need the cover from the in­surance.

Pay your debts on time. Pay­ing late or not pay­ing the full in­stal­ment will ad­versely af­fect your credit rat­ing and pos­si­bly your abil­ity to take out credit in the fu­ture.

Cre­ate a monthly bud­get and stick to it; and

Check your credit re­port reg­u­larly.

Ad­vo­cate Kedi­latile Le­godi is act­ing man­ager: ed­u­ca­tion and com­mu­ni­ca­tion at the NCR.

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