The National Credit Act (NCA)

As a registered credit provider, we fully support the National Credit Act (NCA), which came into effect on 1 June 2007, and have implemented the necessary policies and procedures to meet the requirements of the NCA. The NCA replaces the Usury Act and the Credit Agreements Act. The information that follows will assist you in understanding how this legislation affects you.

Does the NCA apply to you?

The NCA applies to all credit agreements between parties dealing at arms length (where there is no personal interest between the parties). The NCA distinguishes between natural and juristic persons.

The NCA applies to all natural persons.

Only certain provisions of the NCA apply to juristic persons. Provisions relating to marketing, over indebtedness and reckless credit do not apply to juristic persons.

The NCA in its entirety does not apply to juristic persons with an asset value or annual turnover of more that R1 million nor does it apply to juristic persons with an asset value or annual turnover of less than R1 million who enter into a mortgage agreement or an agreement with a loan value of more than R250 000.

How does the NCA affect you?

The NCA affects all credit agreements entered into after 1 June 2007. Credit agreements entered into before 1 June 2007 remain unchanged and are governed by their original terms and conditions. There are however certain provisions of the NCA which apply to existing agreements.

How does the NCA protect you against over indebtedness?

The NCA requires that credit providers perform a full credit assessment before entering into a credit agreement with the customer, this includes taking reasonable steps to ensure that:

• The customer understands the rights and obligations and the risks and costs associated with the credit agreement
• The customer is able to repay the loan

In order to ensure that we protect you against over indebtedness we, in addition to our normal credit assessment, now perform an assessment of repayment ability for each loan application.

In order to ensure that you understand your rights and obligations and the risks and costs associated with the credit agreement you will receive a comprehensive pre-agreement statement and quotation that clearly identifies all the costs involved, the risks associated with the loan, and your rights and obligations. The quote is valid for a minimum of five business days during which you will be given an opportunity to consider the credit being offered. If you have any questions relating to this document we will assist you.

What should you do if you feel that you may be over indebted?

You may be over indebted if, after deducting your living expenses from your net salary, you have less cash left than the instalments of your total debt. You are or will soon be unable to repay your debts. If you believe you are over indebted you should start with:

• Get a credit report from any of the Credit Bureaus listed below. You can get 1 free credit report from any of these bureaus per year.
• On the credit report, you will see your payment history. Look at this and check your budget to see where you can cut back on unnecessary spending and use it towards your debt repayments.
• If no accounts in arrears, keep it up and try to add more to your repayments to pay off debt faster.
• If accounts in arrears, contact the credit provider to inform them of your situation and try to negotiate better repayment terms.
• Check your enquiries. See who’s been looking at your credit report. Some of the institutions that may be checking up on you from time to time include financial institutions, insurance companies, credit providers and potential employers. If you find something suspicious here, contact the bureau you got the report from immediately. Remember, having too many enquiries on your credit report negatively affects your overall credit score.
• Consider consulting a debt counsellor.