A regulated consumer lease is defined as an agreement between two entities, one of which (the tenant) is an individual and the other (the owner) is a person through whom property is loaned to the tenant for use without an option to purchase. [21] The agreement must be “viable” for more than three months, cannot require payments from the tenant totalling more than £5,000, and must not be an “exempt agreement”. “Property” is defined as personally movable property, where “viable” simply means that the agreement does not limit the useful life to less than three months. The agreement must not exceed three months, but the option to do so must be given by a party. [22] The form of the document in which the credit agreement is registered is required by law and varies for credit agreements of different sizes. The details required for a small credit agreement (a principal debt of less than R15,000) are set out in Form 20.2 of the Regulations. It is not really a form, but rather a framework for the minimum content of the agreement. These details include when a borrower defaults on a loan (due to bankruptcy or other event), that borrower loses the property given as collateral, with the lender then becoming the owner of the property. In a typical mortgage transaction, for example, the property acquired using the loan serves as collateral. If the buyer does not repay the loan under the mortgage agreement, the lender can use the legal foreclosure process to become the owner of the property. If it is a second mortgage, the main mortgage is repaid first, using the remaining funds to satisfy the second mortgage.

[3] [4] A pawnshop is a common example of a business that can accept a wide range of items as collateral. In certain circumstances, consumers may terminate contracts (in writing and properly delivered) within five working days of their signature. This right of objection applies only to lease and instalments concluded in a place other than the registered business premises of the credit provider. As a general rule, this right applies to staggered credit sales (as in the case of cars, books, household appliances) that are concluded at the consumer`s home or workplace. The consumer must return the purchased goods and the creditor must repay the amounts paid by the consumer within seven days of termination, less the following: Article 90 lists many provisions of credit agreements (as opposed to all contracts[9]) that are illegal and unauthorized. There are too many of them to list here. The list is long and extensive; many of the provisions are likely to be open to a wide range of interpretations, which is likely to create uncertainty. For example, a provision is illegal if its general purpose or effect is to thwart the purposes or policies of the law or to “deceive” the consumer. In addition, a provision is illegal in credit agreements, the guarantee is the pledge of a borrower of certain goods to a lender to ensure the repayment of a loan. [1] [2] The guarantee serves as protection against a borrower`s default and can therefore be used to offset the loan if the borrower does not pay the principal and interest satisfactorily in accordance with the terms of the credit agreement. The consumer has the obligation to inform the creditor of one of the following changes: in the case of collateral transactions, money is lent and the borrower provides an asset as collateral whose resale value is greater than the loan.

The creditor has the right to sell the property if the money is not repaid on an agreed date and to withhold the proceeds of the sale. The lender will not recover the borrowed money or the goods sold, and the court does not have the discretion to order it. This is a drastic means and a departure from the common law. Previously, it was not available from unregistered microcredits and represents an important new remedy that is easily accessible to consumers. Once a purchase agreement has been negotiated and the buyer and seller have agreed that a letter of credit will be used as a method of payment, the applicant will usually contact a bank to request the issuance of a letter of credit. Once the issuing bank has assessed the buyer`s credit risk – that is, the applicant will be able to pay for the goods – it will issue the letter of credit, which means that it will give the seller an undertaking to pay upon presentation of certain documents. Once the beneficiary (the seller) has received the letter of credit, he will review the conditions to ensure that it complies with the contract and arrange for the shipment of the goods or request a modification of the letter of credit so that it complies with the terms of the contract. The letter of credit is limited in time, the validity of the credit note, the last date of shipment and the delay in which the documents can be presented to the designated bank after shipment. [17] Unfortunately, in South Africa, too many people with too little money received too much credit. .