What or who is:

Q: Short Term Personal Loan?
A: A short term loan is also called a microloan, but not the exact same as loan by a micro-lender, as a micro lender can be a lender of short term and long term loans. The NCR classes a short term loan as a short-term credit transaction, which is for a maximum of R8 000 and payable over 6 months or less.

Q: What is the interest on a short term loan?
A: The prescribed interest on a Short term Credit Transaction is 5% per month. That is exclusive of the Initiation fee and the service fee, which is also charged (link to Initiation Fee) ( link to Loan Service Fee)
Also follow this link.
Also follow this link.

Q: Personal Loans of R8 000 and Below?
A: (follow link to Short Term Personal Loan)

Q: Long Term Loans?
A: Also known as an Unsecured Credit Transaction, and are for loans in access of R8 000 and lending periods longer the 6 months.

Q: What is the interest on a long term loan?
A: The prescribed interest on long term loans are calculated as [(RR x 2.2) + 20%] per year. What this means is: RR stands for Repo Rate which is Repurchase Rate. The current RR is: 5.5, as of 30/01/2014. As the Repo Rate is not fixed; it is adjusted by the Reserve Bank, visit this link to see the latest RR. Therefore the current interest rate works out to be: (5.5 x 2.2) + 20% = 32.1% per year

Q: Personal Loans of More than R8 000?
A: See: Long term loans (link to Long Term Loans)

Q: Consolidation Loan?
A: A consolidation loan is when all your current loans as per the NLR, National Loan Register is consolidated into one larger loan. So instead of paying many smaller loans you will now only pay one. The advantage could be one monthly service fee, instead of many. Another possible advantage is lower interest rate as short term credit transactions have higher interest rates. Also the effect on your credit score is more positive due to lesser amount of loans to your name.

Q: Requirements for a consolidation loan?
A: On top of the standard loan requirements link to Loan requirements there are also:
Your current employer must have more than 50 employees
You must be able to afford the new monthly payment
All your loans must be consolidated, you cannot include some and some not.
It is more difficult to qualify for a consolidation than for another personal loan in terms of your credit history
Payment reversals are not good

Q: Payday Loan?
A: A payday loan is also referred as a pay advance or cash advance. It is classed as an unsecured short term credit transaction with a maximum lending of R8000.00. Most payday lenders do not lend more than R2500.00. The full amount borrowed is usually payable on the client's upcoming pay-day or in some cases within 45 days from transaction. Most payday lenders will only lend a small amount on the first transaction, and increasing the amount on subsequent transactions.

Q: Initiation Fee, or loan establishment fee?
A: In addition to interest, a credit provider may also charge you an initiation fee when you take out a loan. In terms of the NCA, the initiation fee on unsecured loans long term loans and short-term loans is R150 per credit agreement (loan), plus 10 percent of the amount of the agreement in excess of R1000, but may never exceed a total of R1 000

Q: Loan Service fee?
A - Lenders may also charge you a monthly service fee, but no more than R50 excluding VAT.

Q: Credit Insurance?
A - A credit provider, lender can insist that you take out credit insurance and maintain it for the duration of the agreement, but the credit provider can't force you to take his insurance, if you can provide your own. Whatever policy you take out must cover your total liability and no more. So, as the amount owing reduces, so too must your credit insurance premium.

Q: Loan Shark?
A: A Loan Shark is usually the term given to a lender that operates outside the law, someone charging fees that are more than the prescribed fees and interest as set by the NCR. Also if the lender is not registered with the NCR as a Credit Provider, the term as loan shark is applicable. A lender that requires you to hand over your ID book or bank card till payday is operating outside the law and they too are termed Loan Shark. Loan Sharks are also known to use violence for collecting unpaid loans. It is outside the scope of www.loansinJohannesburg.co.za and all our partners, agents and affiliates to deal with any organisation or lender dealing with Loan Sharks.

Q: NCR, National Credit Regulator?
A: The National Credit Regulator (NCR) was established as the regulator under the National Credit Act No. 34 of 2005 (The Act) and is responsible for the regulation of the South African credit industry. It is tasked with carrying out education, research, policy development, registration of industry participants, investigation of complaints, and ensuring the enforcement of the Act. The Act requires the Regulator to promote the development of an accessible credit market, particularly to address the needs of historically disadvantaged persons, low income persons, and remote, isolated or low density communities. The NCR is also tasked with the registration of credit providers, credit bureaux and debt counsellors; and with the enforcement of compliance with the Act.

Q: How to contact the NCR?
A: Website: http://www.ncr.org.za/
Email: complaints@ncr.org.za
Telephone: 011 - 554 2600; 0860 627 627 (0860 NCR NCR)

Q: CPA, Consumer Protection Act?
A: The Consumer Protection Act, no. 68 of 2008 came into effect on 31 March 2011. The Act sets out the minimum requirements to ensure adequate consumer protection in South Africa. This Act constitutes an overarching framework for consumer protection, and all other laws which provides for consumer protection (usually within a particular sector) will need to be read with this Act to ensure a common standard of protection. All suppliers of goods and services will need to take note of the new measures and ensure that they are able to comply.

Q: PDA?
A: A PDA is used by Debt Counsellors to effectively and reliably distribute funds between the over indebted consumer's debtors. While under debt review/counselling, it is prohibited by the counselling to collect and distribute your monthly debt repayments. There are currently only 4 registered Payment Distribution Agents in South Africa. To find a NCR registered PDA, follow this link: NCR Registered Debt Counselling PDA

Q: DO
A: A Do is a Debit Order is where a 3rd party can collect money from your account. The 3rd party (for example the money lender or service provider) is given permission by the consumer (the person who made use of a service or who needs to repay a loan) to collect money from the client's bank account. This permission can be in the form of a written mandate, recorded telephone conversation or electronic mandate.

Q: EDO?
A: An Edo is an Early Debit Order. There are two types of Edo's; namely AEDO, Authenticated Early Debit Order, and NAEDO, Non-Authenticated Early Debit Order

Q: NAEDO?
A: Non-Authenticated Early Debit Order (NAEDO) is a debit order that can be fine-tuned to improve the likelihood of a successful collection. A NAEDO can also be set to track the clients account by selecting tracking days. Where a standard debit order is only presented to the bank once and at any random time a NAEDO can be presented twice a day and is usually set closer to credit payments like salary deposits.

Q: AEDO
A: An Authenticated Early Debit Order is a payment made by a consumer in real time. It is the type of transaction you make when your card is swiped and you enter a PIN code, like in a supermarket or buying online with your card. AEDO transactions cannot be reversed except in the case of fraught.

Q: Debt Collector?
A- Is a person or company employed to collect debt as accumulated by a consumer, and is usually the process that follows after a lender or service provider has failed to collect what is owed to them. Debt Collectors are to be registered by the NCR to collect money or goods from a consumer. Debt collectors usually charge their fee on top of the amount that is to be collected. When a consumer is listed for unsuccessful collection, a Credit Bureau listing usually takes place, which has a negative reflection on a consumer's credit profile. To search for a Collector that is registered with the NCR, follow this link to Registered Debt Collectors

Q: Explain Credit?
A: Credit is what you receive money or goods now and agrees to pay back at a later date. For instance you receive a loan, and are only required to pay back over a period of 12 months. A Credit card is credit on demand and is payable at a later stage, either the full amount, set minimum amount or a re-arranged budget. For more see Short term Credit Agreement and Long term Credit Agreement.

Q: Explain Interest?
A: Interest is the extra charge, usually in a percentage of the total value that pays for the credit you receive in the form of a loan or goods received. Example: Interest charges on a short term loan is 5% per month; therefore Loan amount x 5% x 6 months = monthly repayment (excluding initiation fee and monthly account fees.

Q: What type of credit agreements are there?
a) Credit Facility e.g. Overdrafts, Credit Cards
b) Credit guarantee e.g. Securityship
c) Credit Transaction
i. Pawn or discount transaction
ii. Incidental Credit
iii. Mortgage or secured loan
iv. Lease of personal property
v. Any other agreement where payment is deferred and interest is charged
d) Any combination of the above

Q: Secured Credit Agreement or secured loan?
A: Is when an acceptable form of collateral/asset is made available as surety for the credit, e.g. a house or car is put up as surety to cover the loan in the event of non-payment

Q: Unsecured Credit Agreement or unsecured loan?
A: Is when credit, a loan is granted purely on the credit worthiness of the consumer. This is usually based on income, current credit status, living expenses, employment status, and credit history as derived from the consumer's credit score.

Q: Pawn Transaction?
A: Is when goods are offered as security in exchange of money.

Q: What is not classed a credit agreement/transaction?
A: Insurance policies or renting a house.

Q: Credit Act?
A: Was established to regulate the South African credit industry. It is the task of the NCR to regulate the National Credit act 34 of 2005 which came into life as of June 2007. Follow the link to download the Credit Act 34 of2005: http://www.ncr.org.za/pdfs/NATIONAL_CREDIT_ACT.pdf

Q: What is the purpose of the act?
A: To advance the social and economic welfare of the citizens of South Africa by promoting a fair, competitive, responsible, transparent, effective and transparent credit market and protecting the consumer.

Q: Lender?
A: Is the institution who offers personal loans or consolidation loans to qualifying consumers, in return for repayments with interest.

Q: Revolving Credit?
A: Also referred as Line of credit or demand loan, and is similar in operation as a bank overdraft.

Q: Line of Credit
A: Is also referred to as revolving credit or demand loan. Usually a maximum amount is set for the account, and the client can withdraw from the account at any time up to the maximum set amount. In operation it is the same as a bank overdraft. Interest is only calculated on the amount withdrawn from the account.

Q: Instalment Loans?
A: Is a loan repayable in set monthly instalments over a period ranging from 2 months to 30 years, in short the same as a personal loan, but not the same as a pay day loan.

Q: Personal Loan?
A: Is a loan which is granted to a consumer for personal use, and is the same as unsecured credit, or unsecured loan. The money lend is based on the credit worthiness of the individual.

Q: Credit Insurance?
A: Credit insurance is insurance to the money lender of receiving his money in the case of the borrower not being able to repay due to sickness, unemployment or death. The credit provider cannot force you to take his insurance as long as your insurance is adequate or better.

Q: Credit Bureau?
A: There are numerous credit bureaus operating in South Africa, some are broad spectrum/general gatherers of credit information while others would specialize in certain fields like medical. These credit bureaus gather information on consumers, as in contact details, payment history, defaults, loans, credit agreements, and credit applications.

Q: Credit Score?
A: It is a numerical calculation based on information as kept by the credit bureaus. Lenders will for instance only consider granting a loan if the applicant's score is above a certain value. As these values differ from lender to lender and is continually adjusted to allow for more strict credit evaluation of lower the value to encourage more applicants. What is better is to know how to improve of protect your credit score (to know more, follow this link to Credit Score =1)

Q: The 6 Pillars of Credit
a. Character. This is a summary of the person seeking credit; are you seen as a trustworthy person, someone who will repay what was borrowed.
b. Capacity. This is the person's ability to make re-payments, does they earn enough, and are not over-committed with other debt.
c. Collateral. What does the borrower put up for security, a car, house, bonds, stocks, and any fixed possessions that can be sold if payments are not met?
d. Conditions. Economic Conditions: this is the lenders general policy towards loans and the current economic situation. Regulatory Conditions: this is when a lender does not lend money to employees of certain companies or institutions; for instance when there are mass retrenchments, or strikes.
e. Credit. This is the person's credit history and credit score
f. Capital. This is the net worth of the person, the value of assets, capital in bonds, stocks, savings, and annuities. If everything is sold today, what would the capital be?

Q: Administration?
A: Administration apply to debt with a maximum value of R50 000. When under admin, your finances are in the hands of an administrator, who will receive your income and first deduct what is required for living expenses. The remainder of the money is then distributed evenly, by ration amongst your creditors, those you legally owe money.

Q - The cost of being under Admin?
A: Up to R1200 to obtain an administration order and 12.5% of the amount payable to the creditors.

Q: Disadvantages for being under Admin?
A. It is noted on your credit record
B. The fees are very high
C. You cannot get new credit, loans while under admin.
D. You will stay under admin till all your debt is paid

Q: Types of Sequestration?
A: There are 2 types, namely Voluntary and Forced Sequestration.

Q: Voluntary Sequestration?
A:Voluntary Sequestration is only possible if the debtor have enough assets to make a 10 to 20% contribution to the debtors. Sequestration is a High Court application and can only be handled by and attorney. It will be noted on your credit history. You will be sequestrated till you apply for a Rehabilitation Order, which is usually between 3 and 10 years. The legal process will cost you in the order of up to R20 000 and more in some cases. While being sequestrated you cannot apply for new credit. Sequestration includes all assets, including your home and car.

Q: Forced Sequestration?
A: This when the credit providers take legal action against you.

Q: Liquidation?
A: Companies wishing to be declared insolvent, file for liquidation, whereas an individual who wishes to be declared insolvent, need to apply for sequestration.

Q: Who is classed as a Credit Provider and are required to register?
A. An individual or juristic person who have more than 100 credit agreements or have more than R500 000 worth of outstanding credit.
B. Those who are committed to combat over-indebtedness

Q: Who are excluded from registering as a credit provider?
A. Those with less than 100 credit agreements or less than R500 000 worth of outstanding credit
B. Service providers with outstanding client accounts due to not being paid for their service are by default an Incidental Credit Provider. E.g. Doctors, Advisors, Loan Lead Providers. Incidental Credit can be charged at a maximum rate of 2% per month on outstanding accounts

Q: Who is the Consumer?
A: A person who is buying goods, making use of paid service or entering into a credit transaction as in a loan. There are 2 types of consumers: Personal Consumer and Organizational Consumer. Person Consumer is a person who enters a credit agreement, making a loan, buying a car, or making use of a paid service as that of a loan lead provider. Organizational Consumer is for example businesses, organisations, clubs, firms or when the consumer is representing a concern more than just him in person.

Q: NCA, Nation Credit Act?
A: The National credit act as enforced by the NCR, National Credit Regulator, is Act no 34 of 2005. Therefore the acts regulator is the NCR. The NCR is responsible for the regulation of the South African credit industry with the act as guidance. The NCR is tasked to promote an accessible credit market, to address the needs of disadvantaged persons, low income earners and remote communities.

Q: Who is the Credit Ombut , also known as the Ombutsman?
A: The Credit Ombut resolves complaints from consumers and businesses that are negatively affected by credit bureau information or when a consumer has a dispute with a credit provider or debt counsellor or PDA, payment distribution agency.

Q: Credit Report?
A: A credit report is the payment history of all the account a consumer had for the last 2 years. It shows how these accounts were paid, when payments were missed and when paid on time. It also shows any defaults on accounts, accounts which are more than 3 months behind. It logs every time you apply for credit, as in a loan. Your credit report is used to determine if you can qualify for new credit.

Q: Can I get a copy of my Credit report?
A: You can get one free credit report per year. If you require additional copies within one year, you will be required to pay a fee, which varieties between bureaus and reports. The bureaus can be contacted by phone of it can be done by visiting them online.

Q: Can the Credit Bureau decline my application?
A: The credit Bureaus do not grant credit, credit is granted by lenders either as secured or unsecured credit, or as a pawn transaction. The credit bureaus only compile financial information on consumers; this info is used by the lenders to determine credit worthiness of consumers.

Q: Blacklisted
A: Blacklisted is only a term used by lenders to refer to a consumer who missed payments or stopped payments to their current credit provider or providers. Blacklisted is also used for slow-payers, people who consistently pay late or miss payments. Credit bureaus do not list consumers as being blacklisted, as they gather good and bad credit history.

Q: Default?
A: If your instalment payment is late by 20 business days or more, a notice of default can be send out reminding you, that you missed a payment

Q: Default as listed by the Credit bureaus?
A: A default is when you missed to make a payment as per the agreement. Credit Bureaus keep default records for two years. Defaults will appear on your report for example: 00010012 "0" is payment made. Read from left to right the 1st "1" as a missed payment, but followed by a "0", indicating you made 2 payments and are up to date again. The "2" indicate you are currently behind with 2 payments, and will have to make 3 payments (the 2 behind payments and the new payment) to be back to "0".

Q: Default reporting to the credit bureaus?
A: This varies from provider to provider, but they have to be a registered credit provider and subscribed with a credit Bureau.
The default must be accurate; the account must not be in dispute; prior notifications must have been sent to you; it must be from a credit transaction.

Q: How long does a default stay on your record?
A: One year for normal defaults and 2 years whet the credit provider took legal action as in debt collection, handed over, debt written off or prosecution.

Q: What to do with a default on record?
A: Make payments to get it back on track; once all defaults are paid, ask the credit providers for a copy of cleared payments, and ask the provider to contact the credit bureau to update your records.

Q: What is a Judgment?
A: A judgement is when a court order is requested by the credit provider when have not paid as per agreement. A legal process is followed before the judgment is issued in the form of summons. This can be done to you in person or to your address as recorded by the credit provider at the time of agreement. The summons is for you to appear in court to defend yourself. A judgement is held on record by the credit bureaus for 5 years.

Q: What if I do not agree with my credit report?
A: You need to contact the relevant credit bureau, complete a form and send all the information as in receipts and statements as proof of the contrary. The bureau will supply you with a quarry number. If no response was received after 20 business days, call the Omudsman to resolve the complaint, on 0861 66 28 37.

Q: Why do Credit providers check your credit profile/history?
A: They need to see how you managed our other debt; they want to see your payment history; to determine if you are a low or high risk consumer (low risk lenders can receive lower interest rate); to determine affordability (income vs expenses)

Q: What information is kept by the Credit Bureaus?
A: Public Info: Judgements, which are public records and there for anyone to see (not a good thing) and is kept for 5 years
Credit Info: this is uploaded by the credit providers and is a history of payments and defaults, ranging from loans to credit transactions.
Identity Info: personal Info as in name, aliases, home address, work address, telephone and contact details.
This info is supplied by you, usually by your consent (see the fine print in contracts)
Bureaus do not keep records of race, political status, religion, memberships, unions, criminal records, sexual orientation, health history or other sensitive information.

Q: Why does the default and judgment stay on record even when paid?
A: It will only be removed when rescinded in court of if you qualify under the National Credit Act in terms of Amnesty, Section 73. As per the NCA, defaults show for 2 years and a paid-up notice must be added.

Q: Why must defaults and Judgments stay for 2 and 5 years?
A: It is so determined by the National Credit Act 34 of 2005

Q: How do the credit bureaus get my information?
A: When you apply for credit, you give consent to the credit provider to do a credit check on you and you supply information to the provider which is uploaded to the bureaus.

Q: What if an account was opened in your name without authority?
A: Contact the credit provider in question and ask to investigate the matter; if no satisfactory results are obtained and the matter is resolved, contact the credit bureau which listed the account and ask them to investigate. If still not resolved, contact the Ombutsman.

Q: Why should I pay for my own information?
A: Credit bureaus are private companies, but you are entitled to one free report per year.

Q: Cannot make payments?
A: Contact your credit providers and make arrangements for delayed or reduced payments, till such time of employment, do not first wait for defaulting on repayments. Once an agreement was reached, request it to be in writing.

Q: I'm asked to sign an account on behalf of someone else?
A: You are now the owner of the contact, if a default happens it will to your name, you will be the one the debt collectors will chase. If someone cannot open his account, there is a good reason for it; they might just take you down with them.

Q: What is a Garnishee Order?
A: A garnishee order is a court order which gives the creditor the right to take his payments direct from your pay, before the rest is deposited in your account. Most mainstream lenders do not grant loans to those with garnishees against you.

Q: What's the effect on returning goods on hired purchase, HP?
A: This is provided for as per the NCA, a consumer can return goods bought to the seller, secured credit provider. The credit provider will sell the goods and credit your account with the profit from the sale. You will be liable for the rest should there be a shortfall. You will have to pay the outstanding amount within 10 days.

Q: What is an Admin Order?
A: An Admin order or sometimes referred to as being under Administration, Admin. This a court order granted by the court on request by the debtor or credit provider. It only applies to debt of R50 000 or less. An administrator is appointed to divide your payments under your debtors as per the admin order. An admin order stays on your credit record for 10 years or 5 years from the date of rehabilitation. It cannot be removed from the credit bureaus for 10 years, making it not a good thing on any credit record.

Q: Debt Counselling?
A: The definition of debt counselling is: a process that educates consumers on how to avoid debt and what to do to minimise debt by teaching and putting in place debt management budget and plan. Therefore debt counselling is when a consumer is helped to overcome his debt related difficulty.

Q: Debt counselling, as per the NCR?
A: Debt counselling is the assistance given to a consumer who is having debt problems, as in loans and other credit related commitments?

Q: The debt counselling process?
A -
I. Give the consumer advice on budgeting.
II. Restructure their re-payments to an affordable amount, so not to leave the consumer without life's necessities.
III. Negotiate with the consumer's credit providers on reducing the monthly re-payments
IV. Monitor the monthly payments with the help of a PDA (Payment Distribution Agency)
V. After care service to the consumer
VI. Re-evaluating the consumer's financial position in 12 months' time.
Q: Debt counsellor restrictions?
A: A debt counsellor can be part of a bigger counselling company or can work as an individual. As per the Credit Act 34 of 2005, a debt counsellor or debt counselling company is not allowed to do or be part of: debt collection, credit providing (example loans) or credit bureau.

Q: How do I apply for debt counselling?
A - Any consumer who feels the need to relief the pressure of debt can apply for counselling. It is advisable to contact the NCR for a registered debt counsellor in your area, or make use of a counsellor by means of referral by those who are currently under counselling. The NCR can be contacted by calling 0860 627 627, or threw their website www.ncr.org.za/register_of_registrants (http://www.ncr.org.za/register_of_registrants/index.php?option=DC )

Q: What is Debt Review?
A: Debt review is actually the same as Debt Counselling. In the counselling process debt review is the first step; to access if the consumer is over indebted or not as per the guidelines of the Credit Act. Once a consumer is accessed as being over-indebted, the counselling process will begin. (See: What is debt Counselling = link)

Q: Debt Mediation?
A: Also known as VDMS, Voluntary Debt Mediation Solution. Debt Mediation is very similar to Debt Counselling, also known as Debt Review, but does have some shortcomings. Some of these shortcomings are: you are not protected by law as no court order is obtained; a credit provider can only restructure those payments at their own company, not those of another; mediation is only partial relief as it is on only on a smaller part of the debt; debt counselling is on the entire credit profile; Debt Mediation is not recognised by the NCR as an effective debt relief measure.