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Unlawful Provisions Credit Agreements

Consumers may pay in advance any amount due under a credit agreement (e.g. B mensts due) and credit providers are required to accept such amounts even if they are not due. These payments are used first for unpaid interest and fees, and then to reduce the principal debt. The new credit limits have a negative impact on small loans. The smaller the credit, the more expensive it is. A one-month loan of R500 costs about the same as the typical thirty percent per month calculated before the law. An R200 loan costs 46 percent per month (552 percent per year), more than nine times the maximum interest rates of five percent per month. The NCR may be invited by the Minister to create a single national register of outstanding credit agreements, but it has not yet done so. Once established, credit providers must provide the following information for each credit agreement: for some credit agreements (usually tempered agreements), the consumer only becomes the owner when the purchase price has been paid full-time and the credit provider is entitled to a withdrawal in the event of a breach of contract. Until then, the lender has an interest in the goods being retained. Consumers have the right to settle their debts at any time, with or without notice, after requesting from the lender a statement of the amount necessary to pay the account. for small contracts, no billing fee is payable; Interest and other charges must only be paid until the date of the statement.

This means that a consumer can demand the balance due from the credit provider, pay the full amount and not be sanctioned for it. It is important to understand the full impact of the new cost of borrowing provisions in the National Credit Act and Regulations. The crucial role of credit in the economy is explained in the Context of the Ministry of Trade and Industry of August 2004: if a credit agreement proves to be illegal, a court must order that mortgage contracts be loans of money secured by the registration of a mortgage bond on land the proceeds of which are normally used for the purchase of land or housing. However, this does not apply to large contracts such as mortgage bonds. If a consumer wishes to pay a loan, he must first assist the lender with a termination for a period of three months. When a mortgage is terminated, the consumer is responsible for the cancellation fee of the bond. The national credit law has made great strides in consumer protection and the new interest rate limits will bring welcome relief to many borrowers. However, the combined effect of interest, opening fees and service charges will result in the cost of credit for small loans remaining exorbitant. This will have devastating negative effects on poorer individuals and communities. For mortgage contracts, the maximum interest rate is 24.9 per cent per annum.

Credit cannot therefore be considered as a universal basic service to which access should be extended, as should access to water, health care and electricity. . . .