Incidental Credit Agreement Meaning
Basically, two prices are listed in advance and you can then choose to pay the lowest price (relative to the discounted amount) until a certain time, or pay the highest price at a later date, or even periodically. If the payment is deferred, it is a credit transaction when a commission, tax or interest is levied on the deferred amount. As a general rule, if no commission, commission or interest is collected, this is not considered a credit transaction. The law limits the lender`s common right to impose debts, i.e. to demand what is owed under the credit contract. This is in line with international consumer law, but the provisions of the law have been criticized for being unusually cumbersome and harmful to credit providers.  Interest rates and fees are only maximum amounts. The Department of Trade and Industry hopes that the credit sector will not „jump at maximum rates“ and has stated that it has the power to adjust these rates quickly if necessary. The new structure for the cost of credit will work better for the largest credit advances of more than R8,000. The cost of loans for contracts under R1000 is comparable to 30% per month, with no interest rate limit calculated for small loans, the vast majority of microcredit borrowers come from low-income groups.
The poorest households bear the heaviest burden of debt servient. It is therefore likely that low-income people and communities that borrow small amounts will continue to suffer from the devastating socio-economic difficulties mentioned above, contributing to the persistence of poverty. The National Credit Act imposes limited interest rates on all forms of credit, including microcredit. However, the law introduces other fees (initiation fees and service charges) that keep the total cost of credit extremely high. It is no longer enough to take into account only interest rates. Interest rates, introductory fees and service charges must be carefully calculated to calculate the total cost of credits for borrowers. The new cost of credit provisions came into effect on June 1, 2007. The debt verification procedure may well be used by smart consumers to delay or avoid payments under a credit contract. This is because there are many legislation that limits the rights of credit providers to enforce their claims.
However, if the consumer is under an audited credit contract, the credit provider can provide the consumer, the debt advisor and the NCR with the end of the audit. This notification can be made at least 60 days after the date of the debt review request, i.e. if the debt review process takes too long. The credit provider can then take steps to enforce the agreement. The court then has the power to order the resumption of the debt review, if any. A consumer`s request for a debt review has serious implications for their creditworthiness and for future agreements. This is serious. Many of these provisions are intended to penalize credit providers. Credit providers will be very careful to reduce the risk of non-performing loans. These provisions should therefore reduce over-indebtedness and reckless lending, at least in the formal sector. However, a negative result for consumers may be that lender loans will be much more reluctant in the future and, as a result, fewer people will have access to credit. In addition, this could lead to an increase in the number of unregistered and illegal credit providers.
For mortgage loan contracts, the maximum interest rate is 24.9% per year. This result is so unfair that borrowers are discriminated against very small borrowers (almost without exception from the poorest communities). The law itself stipulates that service charges must vary from the main debt, i.e. they should be higher for large loans and lower for the