Consumer Rights: What You Need to Know When Applying for a Loan

July 18, 2019

Applying for a loan is one thing; knowing your duties and rights as a consumer is another. 

Sure, you are most probably aware of how the loan process goes—from applying for a loan, to getting approved, to meeting your financial obligations, down to paying off the loan. However, it helps if you know your basic rights as a consumer by heart. You should know what you’re getting yourself into financially and how to respond to any financial circumstances. 

This is crucial, particularly since you’re dealing with money. Being ignorant when it comes to such matters may have a negative impact on your finances, credit standing, and life in general. So when it comes to consumer rights, here’s what you need to know when you’re applying for a loan:

The right to apply for credit

First off, you should know that everyone has the right to apply for credit from any provider. This means that you can apply for a loan, regardless of your colour, race, marital status, sexual orientation, religious belief, political affiliation, and affiliation to any trade union, among others. There’s no room for discrimination here as per the National Credit Act. However, this doesn’t mean the credit provider you approach is required to approve your application.

The right to ask about credit decline

As it is the credit provider’s discretion to approve or decline your loan application based on its set guidelines, then you deserve an acceptable reason or explanation. In most cases, applicants are rejected based on unfavourable reports received by credit providers from the credit bureaus. If that’s the reason why they declined your application, then you have the right to ask for the name, address, and contact details of the credit bureau they got their information from.

The right to be provided documents

Credit providers ought to provide you with pertinent documents in the dominant language of the area of operation. For instance, African Bank hands over contracts in English, Zulu, and Sesotho. These documents must be clear and understandable.

The right to be given agreement statements

Speaking of documents, you also have the right to be given credit agreements. You can always request a copy of all pertinent documents via snail mail, email, or fax. Should you lose a copy, you can always ask for a replacement. 

The right to be educated about the credit

It’s imperative that you are educated about the loan terms and agreements prior to sealing the deal or signing the contract. The contracts and loan agreements serve as proof that you’ve been informed and educated about the loan terms and agreements once you’ve signed them.

The right to receive periodic statements

Your credit provider should provide you with a billing statement or invoice on a monthly basis or once every two months.

The right to confidentiality

You have the right to confidential treatment. This means that all confidential information should be kept away from the public eye. They can only be released on valid grounds, such as where they are requirements sought by the NCA or other legislation.

The right to get information from credit bureaus

You can request your credit status from a credit bureau every twelve months free of charge.

The right to credit disputes

However, if you disagree with the contents of the credit report, then you have the right to dispute it. You can request proof of accuracy when it comes to the information held by a credit bureau. You should receive this within 20 business days from the date you asked for it.

The right to the removal of consumer credit information

Finally, you have the right to ask for the removal of adverse consumer credit information. In most cases, the credit provider informs the credit bureaus once you have settled your outstanding balance. Upon receipt, the credit bureaus will remove any adverse classification within seven days. Failure to do so may give you the right to lodge a complaint with the National Credit Regulator.