The National Credit Act is a complex and time-consuming law that attempts to precisely regulate each sector of the consumer credit market. The final provisions of the Act entered into force on 1 June 2007. The law repealed the Usury Act and the Credit Agreements Act and bears little rescind of these laws. It is a clear break with the past. The entire consumer credit law is included in the law applicable to all credit agreements and credit providers. The ambitious and extremely difficult objective of the law is to promote a competitive, efficient and efficient credit sector and a fair, transparent, accountable and accessible market. The main theme of the law is consumer protection. Section 3 of the Act sets out a number of methods that the Act uses to achieve this. Mortgage contracts are cash loans secured by the registration of a mortgage bond on land the proceeds of which are typically used for the purchase of land or housing. The new credit limits have a negative impact on small loans. The smaller the credit, the more expensive it is.
A one-month loan of R500 costs about the same as the typical thirty percent per month calculated before the law. An R200 loan costs 46 percent per month (552 percent per year), more than nine times the maximum interest rates of five percent per month. If a consumer is late, the credit provider must inform the consumer in writing of the delay. It is practically a letter of credence. However, the termination must be more regrettable: the creditor must propose to the consumer that the consumer transfer the credit agreement, among other things, to a debtor advisor to settle the dispute or that he agree on a plan to update the payments. In the case of mortgage transactions, the money is lent and the borrower provides collateral for land with a resale value greater than the loan. The creditor is allowed to sell the property if the money is not repaid on an agreed date and to keep the proceeds of the sale. If the advice to the debtors is unsuccessful, the lender has no other means than to initiate an operating procedure within the meaning of the ACA. Section 8 of the ACA defines what credit agreements are and divides the definition into four categories. A prior declaration is a document indicating the terms of the credit agreement that the creditor wishes to obtain with the consumer. .