Consumer warning on back to school borrowing
ALEXANDRA – Borrow only from registered credit providers – Consumers warned.
Credit is expensive, be a smart consumer and borrow wisely.
This was a post-festive season warning from the National Credit Regulator (NCR) to consumers as the back-to-school hype kicks in.
“Some may need to borrow money to take care of January expenses like school fees, uniforms, transport and others,” said Advocate Kedilatile Legodi, acting manager for education and communication at the agency.
“Do so knowing that credit is expensive – only borrow when it is absolutely necessary to do so and only from credit providers registered with the National Credit Regulator.”
He advised the consumers to be credit smart by understanding the total cost of the credit applied for before signing for it. “The cost includes interest, once-off initiation fees, monthly service fees, credit life insurance, etc. To understand this cost ask for a pre-agreement statement and quotation which will disclose the total amount of the money to be paid back at the end of the repayment period.”
Legodi said the documents are valid for five (5) business days and will assist the consumer to shop around and decide on a better deal.
The consumers are further advised that it’s their right, according to the National Credit Act, to receive the information in plain and understandable language, and reasons when a credit application is declined. Also, to be cautious of unregistered credit providers and borrow only from NCR registered ones.
“Unregistered providers usually charge excessive interest rates that are not in line with the act and do not conduct affordability assessments.
“They use unlawful and prohibited tactics to collect the debt like retaining consumers’ identity documents, bank cards and pin numbers, Sassa cards and others.”
They are also urged to be truthful and honest when applying for credit. “Disclose all relevant and correct information on your financial status.
“Credit that is granted based on incorrect financial disclosure may lead to an inability to repay the debt resulting in financial distress.”
NRC’s tips to credit borrowers:
- Never ever agree to pay upfront costs like admin fees, lawyer’s fees, release fees
- Borrow only when it is absolutely necessary to do so and avoid borrowing money for consumables like groceries
- Do not sign a blank credit agreement or document before reading and understanding the content
- Consider credit insurance which can be a lifesaver when you can not repay the credit and be familiar with its terms
- Pay your debts on time to avoid negative rating and ban from taking future credit. Rearrange repayment terms when faced with difficulties
- Create a monthly budget and stick to it
- Check your credit report regularly.
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