The Credit Agreements Act 75 of 1980: What You Need to Know

The Credit Agreements Act 75 of 1980 is a South African law that governs the credit industry. It was introduced to protect consumers from unfair lending practices and to promote responsible lending. In this article, we will explore the key provisions of the Credit Agreements Act and what they mean for both lenders and borrowers.

What is a credit agreement?

A credit agreement is any agreement in terms of which credit is granted or deferred payment is allowed. This includes loans, credit cards, leases, hire-purchase agreements and any other agreements where payment is not made at the time of the transaction. The Credit Agreements Act applies to all credit agreements entered into in South Africa.

What information must be provided to the borrower?

The Credit Agreements Act requires that certain information be provided to the borrower before a credit agreement is entered into. This includes the total cost of credit, the interest rate, any fees and charges, the repayment schedule and the default charges. The borrower must also be provided with a copy of the agreement.

What are the rights of the borrower?

The Credit Agreements Act provides borrowers with a number of rights. These include the right to receive a statement of account, the right to settle the debt early and the right to cancel the agreement within five business days of entering into it. The borrower also has the right to apply for a debt review if they are struggling to meet their repayments.

What are the responsibilities of the lender?

The lender has a number of responsibilities under the Credit Agreements Act. They must ensure that all information provided to the borrower is accurate and not misleading. They must also ensure that the borrower can afford the repayments and that the credit agreement is not reckless. In addition, the lender must keep records of all credit agreements and make them available to the National Credit Regulator upon request.

What are the consequences of non-compliance?

Non-compliance with the Credit Agreements Act can result in serious consequences for lenders. These include fines, revoked licences and even criminal charges. In addition, borrowers may be entitled to compensation if they have suffered any losses as a result of non-compliance.

Conclusion

The Credit Agreements Act 75 of 1980 is an important law that governs the credit industry in South Africa. It provides important protections for borrowers and ensures that lenders operate in a responsible manner. If you are considering entering into a credit agreement, it is important to familiarise yourself with the provisions of the Act and to ensure that the lender is complying with its requirements.