If you borrow money or buy things on credit in South Africa, the National Credit Act (NCA) is there to protect you. This law helps make sure that lenders treat people fairly and give credit only when it is affordable.
Here is a simple guide to what the NCA means for you.
Who the NCA Protects
The NCA applies to most people who borrow money or buy things on credit. It also applies to small businesses that have assets or yearly income of less than R1 million.
It covers many types of credit, such as:
- Credit cards and overdrafts
- Personal loans
- Store accounts and hire purchase (like buying a TV or fridge and paying it off)
- Car loans and home loans (mortgages)
- Leases and surety agreements (where someone promises to pay if you don’t)
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What the Law Says Credit Providers Must Do
1. Give Clear Information
Before giving you credit, the lender must give you a quote with all the costs. This quote is valid for 5 working days. This gives you time to compare offers and choose the best one.
2. Check if You Can Afford It
You must give the lender details about your income, expenses, and debts. This helps the lender check if you can afford the loan.
3. Tell You the Total Cost
The lender must show you all the costs upfront. These may include:
- The loan amount (the money you borrow)
- Interest
- An upfront fee (called an initiation fee)
- Monthly service fees
- Credit insurance (you can choose your own insurance provider)
- Delivery or setup costs (if buying goods)
- Collection costs (if you miss payments)
Extra hidden fees are not allowed.
4. Let You Pay Early
You can pay back your loan early if you want to. If the loan is more than R250,000 or a home loan, you may be charged up to 3 months’ interest when settling early.
5. Report to Credit Bureaus
Lenders must report all credit agreements to credit bureaus and keep records. This helps build your credit history.
Who Makes Sure the Law is Followed?
Two main bodies help to manage and enforce the NCA:
- National Credit Regulator (NCR): Checks that credit providers follow the rules. It also deals with serious complaints.
- National Consumer Tribunal (NCT): Hears cases about credit problems and can order credit providers to fix issues.
Why the NCA Is Important for You
The NCA helps you:
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- Understand what you are agreeing to
- Avoid borrowing more than you can afford
- Compare different credit offers
- Know your rights as a borrower
- Avoid being charged unfair or hidden fees
The National Credit Act is here to make sure credit is fair, honest, and safe for everyone. Always ask questions and read your credit agreement carefully before signing.
Need Help?
Mdalisu is a registered credit provider – NCRCP8804.
Our Credit Ready Plan (CRP) can help you take control of your money and build a healthy credit profile. Find out more
