Many consumer rights are included in the law, but very few fees for credit providers. (Credit providers, on the other hand, have many obligations.) The law is biased towards consumers because it seeks to eliminate the imbalances inherent in our common law. This is not unusual for such legislation. Consumers have the right to pay their debts at any time, with or without notice, after requesting a statement from the credit provider on the amount required to settle the account. For small agreements, no compensatory fees are due; Interest and other expenses are payable only until the date of the count. This means that a consumer can ask the credit provider for the balance owed, pay the full amount and not be penalized for it. In the case of certain credit contracts (usually temperable contracts), the consumer only becomes owner when the full purchase price is paid and the credit provider has the right to obtain repayment in the event of a breach of contract. Until then, the lender has an interest in keeping the goods. Only a court can declare a careless agreement at the request of the debtor advisor or the consumer. The Court may suspend the credit contract declared ”light” or change the terms of the contract. Credit agencies, credit bureaus and debtor advisors must register with the NCR. Before entering into a credit contract (R-zero threshold), a credit provider must register with the NCR. South Africa`s population is mainly low-wage, with limited or no access to regular credit channels.
The complexity of credit contracts has left many consumers, particularly illiterate, vulnerable and often exploited by credit providers. Microcredits mainly provide loans to consumers who do not have access to regular credit channels. Microfinance is characterized by overpriced debt repayments and capitalizations in fragile markets, which has led to over-indebtedness and an inability to repay monthly repayments. The result was the introduction of the National Credit Act, which created an accessible and affordable credit market, with consumer protection mechanisms against ruthless lending and over-indebtedness. 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. It has been argued that consumers are often responsible for their over-indebtedness by borrowing too much money or buying too much credit. This is usually the result of economic despair and a lack of understanding of the difficulties in repaying or serving their debts.
However, credit providers are often responsible for giving too much credit lightly to consumers who cannot afford to pay off their debts. One of the main objectives of the law is to combat over-indebtedness and ruthless lending. Paragraphs 78 to 88 of the Act contain detailed, extensive and extremely important provisions in this regard. Reckless credit means credits granted to a consumer under a credit contract in which the credit provider is so unfair that borrowers are discriminated against against very small loans (almost all 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 smaller loans. That is not the case. Regulations should be amended to set service charges at a percentage of the loan amount, subject to a minimum and cap (as is the case with the introductory tax).