Everything you need to know about the NCA
The National Credit Act was passed to protect consumers from unscrupulous lenders; it will ensure that lenders comply with fair lending practices when giving credit.
Why did they bring in the NCA?
The NCA was brought into effect, why, silly question people, to protect you, the consumer. Plus, to bring some sort of awareness to the government in helping them manage lending of credit to consumers.
The problem we have in South Africa is that as people we’ve become used to signing to credit. We’ve become used to signing for things when in actual fact there’s small print that’s always undermined us and ended up costing us thousands without us realising it and because of this, people are in debt and the country now has to to help them get out of it… HELL WE WANT OUR INTEREST RATES TO GO DOWN NOT UP!
People are in Debt are you?
As I said before, the NCA was brought out to prevent consumers from falling into that debt trap. The amount of calls we get from people looking to consolidate their debt is horrendous. So back to the point. The government wants S.A. out of debt and they’re going to do this by;
- Promoting the responsible granting of credit
- Regulating the costs of credit – Nobody in their right mind should be charging 45% interest for credit
You see the problem here is that for most of South Africa, and I mean South Africa alone, credit is something we cannot live without. It’s how we pay for everything! It’s a bad trap to get into, bad it’s a worse trap to get out of!
The consumer is to be informed!
What’s great about the new act is that people now are being made aware, which allows you the consumer to make wise choices before just applying for credit. When credit is given to you, the lender now very clearly has to state what interest rate charges he is going to charge you. You need to know upfront what fee’s you’re paying and what the total addition to the original purchase price will be. Watch out, as bond originators are not allowed to charge fees for their services. Check our bond originator alert watch!
Credit Lenders must decline applications
This is where the National Credit Bureau (ncr.org.za) comes into play. Credit lenders now need to fall within the new credit regulations and it’s up to them to do the necessary credit checks before approving people for credit. This goes for vehicle finance, mortgage finance, home loans, retail, personal loans and micro lenders.
Credit Limits and the NCA
Gone are the days when you look at your Edgars account credit and your limit has jumped from R3000 to R25000 without you blinking. Credit lenders may not increase your credit limit without you giving them authority to do so.
Is your Personal Information correct?
Credit bureaus are also controlled by the NCA and are regulated. This way they get to keep control and monitor the personal information of all South Africans who have credit! And believe me, there are loads of them. According to rules and regulations of the NCA the information that the credit bureaus provide about payment habits and personal information need to be very careful that the information is accurate and correct.
THE ACT STATES;
When you enter into an agreement for credit, the credit provider must give you the following options:
- To decline the option of automatic annual credit limit increases
- To be excluded from any telemarketing campaign from the credit provider
- To be excluded from any marketing or customer lists that may be sold or distributed by the credit provider
- To be excluded from any mass distributions of emails or sms’s
What Fees will I be charged for Credit
The NCA stipulates what you may and may not be charged when you enter into a credit agreement. A credit provider may require you to pay;
- An initiation fee, which may not exceed a prescribed amount and may never exceed 15% of the principle debt. You cannot be charged an initiation fee unless you actually enter into the credit agreement and you must be offered the option for paying this fee upfront rather than adding it to your debt.
- The cost of any extended warranty agreement
- Connection fees, levies or charges
- Taxes, licence or registration fees
- Credit Insurance