Leasing contracts for movable property – i.e. not land or housing – would include, for example, a fax machine or motor vehicle, with rent paid in instalments as well as fees and interest. (If no interest or fees are charged, it is not a credit transaction within the meaning of the law). Total quantities are usually the value of the rented item. Once all payments are paid, ownership passes to the consumer. This violates customary lease law. However, if the agreement stipulates that the property always remains between the two orders of the lessor, it is still a loan transaction within the meaning of the law. A credit provider may suspend a credit facility (such as a credit card or chequing account) at any time if the consumer is in default, or close the facility with ten business days` notice. The case was brought before the High Court prior to the application of the National Credit Amendment Act, which provides that a court must make a fair and just order when confronted with illegal loan agreements. If the proceeds of the sale are not sufficient to pay the bill, the lender may apply to the court for an order to recover the outstanding balance. This applies in the case of an installment contract, secured loan or leasing. Curiously, the mortgage contract is missing from this list.
This means that the mortgagee (usually a bank) can only rely on the proceeds from the sale of the property to settle the account – even if this is not enough and even if the mortgage debtor (the debtor) is very wealthy and has other assets that could be seized. Before entering into a credit agreement, the lender must provide the consumer with a statement and an offer free of charge in the form prescribed by the Regulations (Form 20 of the Regulations, in the case of small credit agreements). No agreement will be reached at this time; the consumer does not have to sign or pay any fees. This is a new evolution of the law to protect consumers. This document must include the financial details of the proposed agreement (such as the amount of credit provided, the number and amount of payments payable, interest and other charges, the required deposit and credit insurance). Consumers must accept or reject the offer within five days to give them the opportunity to seek better or cheaper loans. Once the consumer has accepted the offer, the credit agreement can be concluded himself. Does the notice of delay really have to reach the consumer to be effective? The Constitutional Court ruled in Sebola v. Standard Bank that, although there is no clear meaning for „delivering“, the law requires the lender to prove and prove that the notice was served on the consumer during the performance of a credit agreement. If the creditor publishes the notice, proof of the consignment registered at the consumer`s address, together with proof that the communication has reached the post office competent for delivery to the consumer, constitute sufficient proof of delivery (unless otherwise specified).
Credit providers, credit agencies and debt advisors must register with the NCR. Before a credit provider submits a loan agreement (the threshold is R Zero), they must register with the NCR. A consumer can reinstate a defaulted credit agreement at any time prior to withdrawal by paying all overdue amounts plus late fees and the cost of claiming the debt to date. The consumer can then repossess the seized good, but not if the good has already been sold. Ancillary credit agreements do not fall within the definition of credit agreements in the law. Section 5 sets out the limited provisions of the Act that apply to them. „Unsecured credit transactions“ are contracts for which there is no collateral for debt (such as loans or sales on credit). There is no limit to the amount or repayment period. Unsecured contracts of more than R8,000 and/or repayable for more than six months fall into this category. .