Credit contracts and what they really say

I do not like credit contracts that are taken out with stores as the interest rates are very high and the administration and initiation fees are also expensive. Buying larger items through your bond saves you money – if you must buy on credit this is the best way!


If you must take a credit contract there is so much small print you never know where to start and if you do most of it is gibberish anyway. What the small print really does is: 1: Protects the lender or seller and 2: Protects you the buyer.

Common Basic Conditions include:

• The ownership of the item you buy belongs to the store until you have paid both the capital and interest in full.
• The risk of ownership is yours from date of possession. Once the goods leave the store you will liable if stolen or damaged, you must insure the goods.
• There is an initiation fee that can be paid in cash or added to the loan. This fee will attract interest if added to the loan value.
• The insurance supplied by the seller does not have to be purchased. However, confirmation that alternative insurance has been taken may be a requirement.
• Life insurance sufficient to cover the outstanding loan amount may be required. This may also be taken by alternative insurers if proof is given.
• You may not move the goods to a new address unless you notify the seller in writing, indicating your new address.
• That access to inspect the goods as well as proof of address must be available on request.
• If you want to settle the loan, you must obtain a settlement amount from the seller. An early settlement fee can be charged by some sellers. Some contracts have a 90day clause. This clause basically means you will have to pay a penalty if you settle the outstanding balance without first giving the lender 90 days notice that you are going to settle.
• If you want to cancel and return the goods you may, however, they will charge you a settlement amount on top of the return of the goods. You can obtain this only after returning the goods. You can then decline to pay the settlement and collect the goods and continue with the contract.
• Extra interest will charged on overdue accounts.
• Extra charges can be added to the contract if they have to phone or write letters for outstanding money.
• The seller can repossess the goods if you default on payment and bill you for the remaining settlement amount.
• The seller is allowed to cede his rights to another. This means that the seller is allowed to sell his debt and does not really affect you in terms of payments or ownership of the goods.
• If the seller gives you a chance when you miss a payment this does not mean that he cannot collect the debt at a later stage or that he has to give you any more chances.
• You must give your domicile (address) where the seller can send legal notices.
• It also informs you of the court that can hear any case related to the contract.
• The seller can load payment information at the credit bureaux, whether it is good or bad. This affects your credit score.
• The details of the legal action that will be taken if you do not make your payments is also explained.

There can be variations and additions to these contracts so always read them but these are a general guide.