Money Matters: Pre-agreement disclosure

Basil Naidoo.

Consumers tend to borrow money to pay off debt, to purchase an asset, holidays, etc. The need for credit is an important part of life; however both the client and the credit provider must act in a responsible manner when entering into a credit agreement.

If in the event, you do decide to borrow money from a registered credit provider the information furnished below will be highly beneficial.

Pre-agreement quotation/disclosure:

In terms of the regulations as stipulated in the National Credit Act credit providers are obliged to furnish consumers with a pre-agreement quotation prior to conclusion of a credit agreement.

This document must be furnished by the credit provider in print and the document is valid for a period of five days. At this stage, no agreement is concluded, only when the consumer accepts the terms and conditions as set out in the pre-agreement quotation an agreement is concluded.

What information is contained in the pre-agreement disclosure?

The above document has all relevant information that is pertinent to the credit agreement that you wish to engage in. Below is some of the information that will be disclosed in the document.

  • Principle debt.
  • Initiation fee.
  • Monthly service fee.
  • Interest.
  • Credit life assurance.
  • Default admin charges.
  • Collection costs.
  • Repayment schedule.
  • Monthly instalments.
  • Total number of installments.
  • Right to apply for debt review.
  • Default procedure.

What purpose does the pre-agreement disclosure serve?

The main reason behind the pre-agreement quotation is for the consumer to fully understand and appreciate the credit agreement in its entirety, especially the actual cost of credit.

The consumer can take this document home. This will allow him to scrutinise the document. He can also work out the total amount that has to be paid back to the credit provider. Once the consumer has all the information at his disposal he can make an informed decision.

Options

  1. Shop around for a better deal
  2. Postpone his decision to commit or consider any decision he may see it

Prior to conclusion of a credit agreement insist on a pre-agreement quotation.

 

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