The National Credit Act imposes limited interest rates on all forms of credit, including microcredit. However, the law introduces other fees (initiation fees and service charges) that keep the total cost of credit extremely high. It is no longer enough to take into account only interest rates. Interest rates, introductory fees and service charges must be carefully calculated to calculate the total cost of credits for borrowers. The new cost of credit provisions came into effect on June 1, 2007. If the credit overrun is significant and lasts more than one month, the customer must be informed of this overrun, the amount exceeded, the nominal interest rate and all applicable penalties, fees or interest in the event of a late payment. An illegal provision is null and fore. Whenever a court has a case involving a credit contract containing an illegal provision, the court can now refer to a judge a much larger number of default applications for credit contracts instead of being dealt with by the court administrator. This will significantly increase the workload of judges and could result in much longer debt enforcement procedures, which could lead to frustration among credit providers. Does standard communication really have to reach the consumer to be effective? In Sebola/Standard Bank, the Constitutional Court held that, although the law does not have a clear meaning for “supply,” it requires the credit provider to demonstrate the application of a credit contract and proves that the notification was sent to the consumer. When the creditor publishes the notification, the proof of the shipment registered to the consumer, accompanied by proof that the communication has reached the corresponding post office for delivery to the consumer, constitutes sufficient proof of the delivery (in the absence of contrary evidence). Institutional credit transactions also include revolving and non-renewable credit options.
However, they are much more complicated than retail agreements. They may also include the issuance of bonds or a credit consortium when several lenders invest in a structured credit product. If a credit contract is found to be illegal, a court must order over-indebtedness. Levenstein summarizes this situation: Provisions for unwary loans do not apply to a number of credit contracts, including certain agreements under the Consumer Credit Act, which includes your rights when entering into a credit contract. This includes: lenders announce full disclosure of all credit terms in a credit agreement. The important credit terms included in the credit agreement include the annual interest rate, the application of interest on outstanding balances, all account-related fees, the duration of the loan, payment terms and possible consequences for late payments. The introductory fee is intended to cover the cost of launching a credit contract, although it is not clear what the costs are to cover.