SA warned about credit

Credit is expensive and consumers should therefore only borrow when it is absolutely necessary to do so, and only from credit providers registered with the National Credit Regulator (NCR), warned Advocate Kedilatile Legodi, Acting Manager: Education and Communication at the NCR.

According to Advocate Kedilatile, 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.”

Legodi stressed that it is the consumer’s obligation to be truthful and honest when applying for credit by disclosing all relevant and correct information regarding their financial status.

Below are helpful tips for consumers when borrowing money:

1. Never ever agree to pay any upfront costs or fees – Many consumers are duped into paying upfront fees labelled as “admin fees”, “lawyer’s fees”, “release fees”. In most cases, consumers lose their money (upfront payment) without getting any of the money they have borrowed.

2. Borrow only when it is absolutely necessary and avoid borrowing money for consumables such as groceries.

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

4. Consider credit insurance – Familiarise yourself with the terms of the credit insurance to avoid surprises when you most need the cover from the insurance. Credit insurance can be a lifesaver when you cannot repay the debt for reasons such as unemployment, disability and others.

5. Pay your debts on time – Paying late or not paying the full instalments will negatively affect your credit rating and possibly your ability to take out credit in the future. If you think you cannot meet your monthly instalment, contact your credit provider immediately and try to re-arrange payments. Do not wait until you skip payments.

6. Create a monthly budget and stick to it.

7. Check your credit report regularly.