“Smart Money : Financial Foundations for a Resilient Future”
NFO TIPS ON YOUR RIGHTS, RESPONSIBILITIES, AND PROTECTION AS A CREDIT USER
Always Request a Pre-Agreement Statement and Quotation:
This is a free document that must be given to you before you sign a credit agreement. It will tell you the full cost of the credit, including the interest you will be charged, the fees you will have to pay, and your monthly repayment amounts, so you can compare offers and choose the credit agreement that’s best for you.
Take Your Time to Review It:
A Pre-Agreement Quotation is valid for five business days. Use this time to shop around, ask questions, and make sure that you understand what you are agreeing to.
Never Sign Under Pressure:
If a credit provider or store agent pressures you to sign immediately, walk away. You have the right to the time and space you need to understand the credit terms fully. If you sign in a rush you may regret your haste later.
Borrow for Needs, Not Wants:
Avoid using credit for luxury or impulse purchases. Responsible credit use builds financial stability over time, rather than burdening you with debt taken on for unnecessary items.
Understand the True Cost of Credit:
The total repayment amount is what you will actually pay. This this includes the loan amount, interest, fees, and any insurance. Remember that buying an item on credit will ultimately cost you more than its actual purchase price, and ask yourself if you can afford the total amount you will end up paying, as well as the monthly instalment amount.
Pay On Time, Every Time:
If you miss a payment or make a late payment, you could be charged extra fees or arrear interest. This could also lower your credit rating. Use debit orders or set reminders to make sure you keep up to date with your payments.
Pay More Than the Minimum Amount:
Credit cards and retail store accounts are convenient but can soon become very expensive if you only pay the minimum amount each month. This will lead to you paying off your debt for longer, and increase the total amount you end up repaying.
Avoid Taking On More Credit If You Are Already Struggling:
Taking on more credit to help you pay off existing debts will only make the situation worse. Rather avoid further borrowing, unless you arrange a loan consolidation which could help you manage your debt situation.
Know Your Credit Profile:
You can request a free credit report once a year from all the major credit bureaus (TransUnion, Experian, Compuscan, XDS). You should also do if this if you suspect you have been a victim of fraud. Always check your credit report carefully for any mistakes or suspicious activity.
Keep a Lid On Your Debt:
Try and keep your total monthly credit repayments below 30% of your take-home income.
If You’re in Financial Distress, Ask for Help:
Contact your credit provider as soon as you struggle to meet your instalments. The sooner you reach out to them, the more options you may have.
Request a Payment Holiday or Reduced Instalments:
Some credit providers offer payment holidays or reduced repayments if you are under financial strain. These options can help you get your finances back on track (although they may end up costing you more in the long term).
Ask for a Restructured Payment Plan:
Your credit provider may offer to extend your loan term, reduce your instalments, or change the repayment structure. Make sure you get a copy of any new or revised agreement in writing.
Consider Voluntary Surrender of a Financed Asset:
If you can no longer afford a vehicle or other large item bought on credit, you may be able to return it to the credit provider for them to sell on auction. This may be a painful decision, but could significantly reduce the amount that you owe. However, if there is a shortfall after the auction sale, you will still be liable to repay this amount. If you have assets that you cannot pay for, your creditors can also follow legal processes to recover these items from you.
Consider Debt Counselling:
If you feel that you are drowning in debt, a registered debt counsellor can negotiate with your credit providers on your behalf and restructure your debt under legal protection. If you choose this option, avoid the risk of scammers by ensuring that you use a debt counsellor who is registered with the National Credit Regulator (NCR).
Report Lost Documents Immediately:
Identity theft can lead to fraudsters borrowing money in your name. Immediately report lost identity documents, credit cards and store cards to your credit providers to prevent fraud.
Be Careful Who You Share Your ID With:
Only give copies of your ID, payslips or bank statements to verified employees of authorised credit providers.
Avoid Applying for Credit via Social Media or Informal Agents:
Stick to recognised financial institutions. Applying for credit from unregistered credit providers is not only risky – it’s also illegal. Only NCR-registered credit providers are allowed to issue credit.
Don’t Hand Over Cards or Documents as Collateral:
It is illegal for any lender or credit provider to take your SASSA card, bank card or ID as security for a loan.
Shred or Destroy Old Financial Documents:
Bank statements, till slips, and pre-approved credit offers can be used to impersonate you. Always be sure to destroy these when you no longer need them.
Be Wary About Co-Signing Loans as Surety:
If the main borrower fails to pay, you will become fully responsible for the outstanding debt. This could even involve the credit provider taking legal action against you.
Avoid Using One Loan to Pay Off Another:
Doing this will increase your long-term debt and your monthly costs. You should urgently seek advice or debt counselling if you are caught in this trap.