Know your rights and responsibilities regarding credit agreements

It is Consumer Awareness Month and time to ensure your know your rights and responsibilities as a consumer, especially regarding credit agreements, in a time when all consumers, no matter what they earn, are struggling to make ends meet and turn to credit to afford daily essentials.

Consumer Month shares March with Human Rights Month. “Consumer rights according to the National Credit Act are, after all, an essential part of your 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, Wikus Olivier, managing director at CreditSmart Financial Services, says.

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

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Basic consumer rights regarding credit agreements

These are some of the basic consumer rights and responsibilities to keep top of mind 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.
  • Olivier says never put pen to paper if you do not fully understand the information o it or are uncertain about the content, fine print and terms and conditions.  
• Be informed when your credit application gets approved or denied and if it is rejected, be notified 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. The credit bureau has 20 business days to resolve your query.”
• Disclosure of information.
  • Never sign a blank credit agreement and before you sign a contract, ask for a pre-agreement that is binding for five business days, Olivier says. “This quotation should contain information such as the borrowed amount, interest amount, deposit amount (if required), repayment period and any additional charges.”
  • 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 says.
• The confidential treatment of your personal information.
  • “Credit providers should treat client information confidentially and should only use your information for the purpose for which you gave it.”

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• By law, 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 NCR-recommended programme for debt counselling or debt review.
  • Communication is crucial when it comes to your creditors. Be proactive and you’re your creditors about a change in your circumstances. You never know what a credit provider will do to help or keep you as a client, Olivier says.
  • 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.
  • Note: 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.

ALSO READ: How to navigate credit in a time of high interest rates and cost of living

These are your responsibilities regarding credit agreements

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 counsellors) 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.
• 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,” Olivier says.