Repossession is the final stage of legal action and is most commonly seen with assets accounts (house, vehicle or furniture). If there has been a deviation from the required credit agreement, credit providers have the right to proceed with legal action to allow them to recuperate the outstanding debt.
27 March 2013
If you apply for credit in South Africa you are entitled to certain basic rights. Angelique Ruzicka consults the National Debt Mediation Association (NDMA) the National Credit Regulator (NCR) to find out exactly what those rights are.
On 15 March we celebrate World Consumer Rights Day with the theme “Consumer Justice Now”. There are many areas that we can improve on, where our rights as consumers are few. However, when it comes to taking out loans we do have some very fundamental rights.
“In South Africa we have progressive legislation in the form of the National Credit Act (NCA) which protects credit consumers,” says CEO of the NDMA, Magauta Mphahlele. “But consumers are often not aware that they can demand certain basic rights when it comes to credit.”
Here are six rights you should take note of before you take out credit:
1. The right to be informed
The National Credit Act stipulates that it’s your right as a consumer to apply for credit and be treated fairly throughout the process. During the application process the credit provider has to assess your financial situation to ensure that you can afford the loan. It’s essential, however, that you give them the correct and truthful information to ensure that they make a proper assessment of your ability to afford the loan.
You have to be given a pre-agreement statement and quotation when seeking credit. “Additional charges such as initiation fees, monthly service fees and credit life insurance should also be stated in the pre-agreement statement and quotation,” says Louisa Hetisani, credit information and research manager at the NCR.
If you are refused credit you have the right to be provided with reasons and if the reasons relate to an adverse credit bureau report, you have the right to be provided with the details of the bureau and its contact details. Consumers also have the right to receive copies of required documents in plain language, including contracts, regular statements of account and various notices where specific actions are undertaken by the credit provider, says the NDMA. You also have the right to choose how you receive these documents, through email, post, fax or any other agreed or prescribed method.
“But consumers should be aware that they are responsible for ensuring that they understand what they sign and [they must] update their contact details so that any correspondence from the credit provider reaches them on time,” says Mphahlele. “If you do not update your details regularly, or sign something you do not understand, you risk compromising your rights.”
2. The right to choose
Don’t just take on the first loan you are awarded. It’s your right to compare interest rates and deals across different credit providers. Ask for a quotation which outlines the credit providers’ terms and rates and use this to shop around for the best rate between different credit providers. “Don’t feel pressurised into signing an agreement that you don’t understand and make sure you know what your repayments will be each month,” says Mphahlele. You can also decide how you will repay your loan – through a debit order or directly by yourself.
3. The right to complain
You have the right to lodge a complaint and for your complaint to be taken seriously. You also have the right to have that complaint resolved to your satisfaction says the NDMA. If you find you are battling to make repayments, you have the right to approach your credit provider as soon as possible to try to discuss a way to either restructure the repayments or negotiate a payment holiday.
4. The right to appeal for help
Don’t put your head in the sand though and think it will all go away. If you skip more than three month’s payment, you may face legal action which leads to more unnecessary costs and fees, so the earlier you tell your lenders that you are struggling, the better. You can also approach an alternative dispute resolution agent, such as the NDMA, Credit Ombud or a debt counsellor to negotiate on your behalf with credit providers.
5. The right to redress
In cases of dispute, consumers have the right to access an effective dispute resolution mechanism that is cheap and accessible. The NDMA provides debt mediation services, including general debt management advice, complaints and debt mediation for consumers and their credit providers free of charge. Since 1 January 2011, the NDMA has dealt with more than 9 000 complaints and enquiries and has handled more than 35 316 incoming calls through its helpline. Other entities like the National Credit Regulator, National Consumer Tribunal, Provincial Consume Affairs Offices and Ombudsman Offices can assist with resolving disputes too.
6. The right to consumer education
As a consumer, you have the right to access educational information that will improve your knowledge about your rights and obligations when dealing with a credit provider or any other supplier of goods and services. The NDMA, for example, provides information through workshops, its website, helpline, SMS line and community outreach programmes.
If you take out credit you do have a lot of rights but remember that once a credit agreement is signed you are obliged to honour its terms and conditions. If you don’t, some of those rights may fall away. “Do not sign unless you fully understand the terms and conditions of the credit agreement,” advises Hetisani.
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