If a credit contract proves illegal, a court must order that the credit provider not recover the money or property sold, and the court does not have the power to order it. This is a drastic remedy and an abandonment of the common law. It was not available from unregistered microcredits and is an important new remedy that is readily available to consumers. The maximum introductory commission in the form of settlements is R150 by credit contract, plus ten percent of the contract amount of more than 1,000 R1, but never more than 1,000 R1,000. In addition, the initiation fee must never exceed 15% of the main debt. In certain circumstances, consumers may terminate contracts (in writing and duly provided) within five business days of signing. This cooling fee applies only to leases and temperance contracts in a location other than the lender`s registered premises. As a general rule, this right applies to increments (such as cars, books, household appliances) made at the consumer`s home or workplace. The consumer must return the goods purchased and the credit provider must repay the amounts paid by the consumer within seven days of the cancellation, minus the institutional credit contracts that must be concluded and signed by all parties involved. In many cases, these credit contracts must also be submitted and approved to the Securities and Exchange Commission (SEC). As part of a credit guarantee, a third party agrees to pay a creditor, on request, the amount owed by a consumer (for example. B in the case of a guarantee that provides a personal guarantee on another person`s debts from an excess cheque account). The effect of opening and service charges on small loans is related to a misappropriation of the cost of credit away with interest and fees, so that interest rates decrease relative to these fees.
This imbalance has the dangerous effect of concealing the real cost of consumer credit and misleading the consumer. This result is so unfair that borrowers are discriminated against very small borrowers (almost without exception from the poorest communities). The law itself stipulates that service charges must vary from the main debt, i.e. they should be higher for large loans and lower for smaller loans.