Understand your personal budget

When people can’t afford to pay for some­thing straight away, they often apply for credit to pay for the purchase or service. 

According to the Cred­it Ombud, credit is an agreement signed by a consumer that enables them to receive goods, services or money now, but only pay for it later.

The National Credit Act (NCA) ensures that all parties in the credit in­dustry are protected and treated fairly.

The Credit Ombud says credit providers must follow NCA guidelines to ensure consumers can pay back the money or pay off the goods.

One of the guidelines is an affordability assess­ment, which determines if the consumer can afford to pay back the debt.

Consumers should do a realistic budget that in­cludes necessary expenses and everything else they spend money on. They also need to get a three-month bank statement to see how and where they spend their money, says the Credit Ombud.

When applying for cred­it, consumers should:

• Read and understand the fine print;
• Be aware of interest and added fees. The NCA re­quires credit providers to disclose and explain the total cost of credit;
• Shop around, don’t set­tle for the first offer. You don’t have to accept the pre-agreement or quote, and you have five days to make your decision;
• Choose the credit facil­ity that best suits your needs;
• Do not use unregistered credit providers. It’s il­legal for anyone to keep your identity document or bank card.

Know your rights

The National Credit Regu­lator (NCR) says consum­ers have various rights enshrined in the NCA, including the right to apply for credit.

The application must be made in good faith, with truthful disclosure of all information by the con­sumer. If the application is declined by the credit provider, a consumer has a right to know why, the NCR says.

Consumers also have the right to:

• Disclosure of informa­tion: A credit provider must provide a pre-agree­ment statement and quotation before you accept and sign a credit agreement;
• Receive documents in an official language you can read or understand;
• Receive information in plain and understandable language;
• Confidential treatment of personal information;
• Access information held at the credit bureau. You can do this for free, once every 12 months, and dispute any incorrect or outdated information;
• Get assistance when you are struggling to pay debt.

The Credit Ombud provides free assistance and advice for all credit bureau and credit agreement-rela­ted matters. For assistance, call 0861 662 837, SMS 44786 (free) or visit www. creditombud.org.za The NCR offers credit education and pro­tection to consumers. For more information, call 0860 627 627 or visit www.ncr.org.za.