Credit approved, now what?

Before signing a credit agreement, you should understand what you’re agreeing to – if you don’t, you could land in financial trouble. Read more about what you should know before you sign a credit agreement.

Quotation and pre–agreement statement

The quotation shows the full cost of your credit agreement. A pre-agreement statement, on the other hand, details the terms and conditions. 

These documents give you information about the agreement. You don’t have to accept the offer, sign anything or pay any fee at this stage. You have 5 days to think it through before you have to make a decision.

Understanding the pre-agreement documents

Read the pre-agreement statement and the quotation carefully and make sure you can answer these questions:

1. Does it state the total cost of the credit?
2. Is the monthly repayment amount shown?
3. Is there a delay in when you’ll start paying the first instalment? For example, do you only start paying after 3 months? Understand what the difference would be to the total cost of credit should you start paying immediately.
4. What is the repayment term?
5. Are any insurance products offered?
6. Are all the costs in line with the National Credit Act?
7. Is the credit provider registered with the National Credit Regulator?

Know your credit responsibilities

The credit agreement specifies, among other things, your responsibilities towards the credit provider. The following information must be in the credit agreement and explained to you:  

• Payments – Show when and how payments will be made, the number of payments, and the date of the first and last payments
• Insurance (if applicable) – All insurance information, including what will and won’t be covered
• Statements – When and how statements will be delivered, e.g. email, post
• Default administration costs – When and how it will be deducted
• Consumer’s right to cancel – The conditions of termination, including the surrender of goods   
• Early settlement – States your rights and obligations should you choose to pay your loan off early
• Credit provider’s right to terminate – Specifies the conditions of such a termination
• Addresses for receiving documents – Including the personal details of all parties
• Penalty interest – Information about the interest that will be charged on late payments
• Marketing options – The option to be excluded from telemarketing campaigns, and marketing or consumer lists
• Annual credit limit increases – Details about automatic increases of credit facility limits
• The right to apply for debt counselling – When to consider it as an
• The rights of the credit provider – Their right to recover goods and to enforce the agreement
• Credit bureaus – Information on the reporting of your information

Remember, you don't have to accept the offer, sign it or pay any fee at this stage. Use the 5 business days allowed to ensure that you fully understand the agreement and review the impact the full costs will have on your wallet, before making a decision.

Should you not be interested, no action is needed.