Need a loan? Here’s what not to do

In this weekly segment of bite-sized chunks of useful information, consumer journalist Wendy Knowler summarises news you can use:

Need a loan? Here’s what not to do

Never has there been more anxiety in “Januworry”, which means it’s feeding frenzy time for loan sharks.

If you type “get a loan” into Google, the searches which come up are heartbreaking: “Get a loan with bad credit/without a job/without a credit check/without a pay slip.”

Many of those desperately seeking loans won’t get one from registered, law-abiding credit providers because the applicants simply don’t qualify.

However, turning to unregistered mashonisas will only plunge people into a worse situation, warns Anne-Carien Du Plooy, the National Credit Regulator’s acting manager of education and communication.

“Unregistered credit providers charge exorbitant interest rates and use other illegal collection mechanisms such as card retention,” she says.

“Consumers should not agree to pay an ‘upfront fee’ . This fee is charged mostly by unregistered or even fake credit providers before they give the consumer the money for which they have applied.

“They call it an attorney fee, a release fee or admin fee, but the National Credit Act makes it illegal for a credit provider to insist a consumer pays them upfront,” Du Plooy says.

“Consumers should not confuse this with a deposit as there is no deposit when taking out a loan.”

Bottom line: the loan person or company will never give you the money you are asking for.

As Du Plooy puts it: “They will suck you dry before they vanish.”

How to stand up to a debt collector

If you have defaulted on your loans and accounts, and you are receiving a barrage of SMSes or calls from debt collectors, here’s what you need to know:

The Debt Collectors Act allows a debt collector to call you from 6am to 9pm Monday to Saturday, but not at all on Sundays.

Always check if the debt collector is registered with the Council for Debt Collectors (unless they are attorneys) and don’t sign any documents or agree to anything before you have taken legal advice, especially not an acknowledgment of debt.

The only time you are forced to sign is when you are served papers by a sheriff or deputy sheriff of the court.

If you receive a call, insist they e-mail you instead, setting out what you are alleged to owe and exactly how that amount was calculated.

For more information about what debt collectors can and can’t do, and what charges they may levy, or to lay a complaint, go to info@cfdc.org.za

* The Council for Debt Collectors is a statutory body whose members are appointed by the justice and constitutional development minister. The council’s role is to enforce the Debt Collectors Act.

'Paper trail' is your friend

I can’t stress enough how important it is to keep your receipts. It takes very little time or energy to develop a system that works for you, even it you throw them into an old shoebox.

Not doing it, on the other hand, can lead to a lot of emotional and financial schlep down the line.

If you no longer wish to use an account, don’t just stop paying it.

E-mail the company to ask for a settlement balance, and when you’ve paid that amount, instruct them to close the account and send you written confirmation. Keep asking until they do it.

Dormant accounts leave you open to fraud because you remain liable to pay the accumulation of service other fees as long as the account is open, whether you use it or not.

CONTACT WENDY:

Email: consumer@knowler.co.za

Twitter: @wendyknowler

Facebook: wendyknowlerconsumer

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