IF YOU have to borrow money, please borrow it wisely.
Mpho Ramapala, education and communication manager at the National Credit Regulator, said you should plan in advance on how you will repay the loans and, most importantly, determine whether you can afford the repayments or not.
The National Credit Act allows a people to be given a pre-agreement statement and quote when seeking credit.
These outline the terms and conditions of the proposed agreement and all costs involved such as interest; monthly service fees; once-off initiation fees; credit insurance, if there is any; a deposit, if required; number of instalments; and the dates of first and last instalment.
This means that you will know what is expected of you prior to signing the credit agreement. In addition, you will be aware of the cost of credit, and terms and conditions before signing the credit agreement.
Once you sign the credit agreement, you have an obligation to honour the terms and conditions of that particular agreement including repayments.
Tips for borrowing wisely
- Borrow as little money as possible. Borrowing to fund your children’s education or home loan is a good idea, but borrowing for luxuries or to pay off other debt is a bad idea.
- The longer you take to pay off your loan, the more you will pay.
- Consider credit insurance to avoid nasty surprises.
- Be honest and disclose ALL the information required by the credit provider. Dishonesty may cause you to lose the protection offered by the National Credit Act.
- Work out how much income your family earns and what your total expenses are each month. You should also plan for unexpected costs such as unemployment.
- Always keep receipts of your payments as you might need these in the future.
