Debt Review Expressions Explained: Credit Provider
When people talk about a “credit provider” they may automatically be thinking of a bank. For example, ABSA is a credit provider, African Bank is a credit provider, Capitec is a credit provider. This is true. Banks offer people credit (they provide credit). Out of all the credit providers, it is the banks who offer people the most credit. There are, however, other credit providers out there other than just the banks.
‘If any person or business allows you to repay a debt over time and charges you a fee to do so, then they are a credit provider’
If any person or business allows you to repay a debt over time and charges you a fee to do so, then they are a credit provider. They are providing you with credit.
The aspect of charging fees is important and it is this feature that distinguishes a credit provider. In general, credit providers charge two or three types of fees:
An initiation fee
A monthly account fee
Interest on the amount you have borrowed
This means that if you have bought something and can pay it back later without any of the above (no interest, no initiation fee, no monthly account fee) then you are not dealing with a credit provider.
So, if your dad gives you R100 and says: “pay me back whenever” then he is not a credit provider he is just a cool dad. This is because he does not expect you to pay him back more than you borrowed and he has not told you when and how to pay the money back.
If, however, you borrow funds from the lady down the road and she says you must pay her back an extra R100 each week until you have paid up the loan then she is a credit provider. She is charging interest on the loan.
There are limits on what credit providers can charge for the different types of credit. They cannot make up their own mind but have to stick to the limits in the National Credit Act (NCA). If they charge more than these very specific limits, then they can be arrested or fined.
Also, credit providers are not allowed to take things from you like your bank card, your ID book, your SASSA card or something similar. This is also illegal. If any credit provider asks for these things then you should report them to the NCR or SAPS.
Credit Providers Must Register
By law, anyone who gives out credit and charges fees or interest on the credit must register with the National Credit Regulator (NCR). The NCR will then send them a sticker to put on their door and ask them to send them regular statistics.
Anyone or any business that does not register with the NCR while offering credit is breaking the law and can be arrested and fined. This is often the case with loansharks. They can be reported to the National Credit Regulator and the SAPS. Each year the NCR and SAPS raid the offices of many illegal credit providers who are breaking the law.
‘Beware of dealing with illegal credit providers. They do not stick to the law and will take advantage of you’
A good way to know if you are dealing with a legitimate credit provider is if they have a sticker from the NCR on their door, ask you for detailed information about your income and expenses and other debts (and proof) and draw a credit report about your financial situation. If they ask for your ID book or bank card they are not legitimate and should be reported.
Beware of dealing with illegal credit providers. They do not stick to the law and will take advantage of you.