By Lungile Ntimba
The Gauteng Office of Consumer Affairs has urged consumers to exercise caution when taking out loans and safeguard their rights from any possible violations by credit providers during this challenging financial period.
Director for Education, Awareness and Stakeholder Relations, Milly Viljoen, said unregistered credit providers like Abomashonisa exploited consumers by imposing exorbitant interest rates, and took their identity documents and social grant cards to enforce payment.
“If your application is declined by all registered credit providers, it means that you have a bigger financial problem than you realise,” Viljoen warned in a statement.
“Rather seek assistance by negotiating for lower instalments with your current credit providers, paying off and closing some accounts than accessing more credit through unregistered credit providers.”
According to the Consumer Protection Act, consumers have a right to receive information in plain and understandable language.
Viljoen said it was crucial that consumers read and comprehended the terms and conditions provided to them and asked questions if they needed clarification.
She advised consumers to borrow only when it was necessary, and urged them to refrain from using credit for consumables such as groceries.
Viljoen emphasised the importance for consumers to safeguard themselves against excessive interest charges by verifying the authenticity of credit providers through the National Credit Regulator.
People needed to be aware of the added cost associated with credit, including interest rates, initiation fees and monthly service fees.
“Consumers should read and understand the pre-agreement statement and quotation which will include all the costs involved,” said Viljoen.
They should avoid signing immediately, especially on a blank document when applying for credit and before going through the terms and conditions.
“Check your credit report often, you are entitled to a free credit report once a year. You have the right to dispute any information that is wrongfully written on your credit profile,” said Viljoen.
She advised them not to pay an ‘upfront fee’ when applying for credit.
January and February are especially difficult for many South Africans who overspend during the festive season.
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