How much interest can one be charged in South Africa?
What is the maximum interest one can be charged for an overdue account?
Have you ever been late in paying a doctors’ bill or your child’s school fees? Were you charged interest for these late payments? Our team at i-Check Data Solutions have put this article together to answer how much interest one can be charged in South Africa.
It is important for you as a consumer to know what are your rights and obligations, if you have found yourself in a situation similar to what was mentioned above, the most that you can be charged on overdue accounts is no more than two percent a month. The National Credit Act (NCA) defines these agreements as incidental credit agreements. The reason that they are termed incidental credit agreements is due to the fact that interest only becomes due on these accounts when you fail to pay for the goods or services after usually thirty days has passed.
It is very important for consumers to read the fine print and make sure that you are not charged more than the prescribed maximum allowed by the NCA.
Incidental credit agreements usually offer lucrative upfront discounts for immediate settlement of the account. In most cases, if you settle immediately you can receive up to 25% off the total cost of the service. It is always wise to ask if immediately settling an account will result in a discount. Offering these types of immediate discounts are very common with doctors, so be sure to ask next time.
Interest on unpaid sectional title levies
If you have found yourselves in arrears with your body corporate levy, what interest can you be charged, and is your body corporate or managing agent at liberty to charge you debt collection costs?
Trustees say they can charge interest at their own discretion since they are not bound by the National Credit Act (NCA).
Sectional title schemes are governed by the Sectional Titles Act and trustees rely on Prescribed Management Rule 31 of the Act, which states that the trustees are entitled to charge interest on arrears amounts “at such rate as they may from time to time determine”.
They also argue that the NCA does not apply to levies because bodies corporate do not provide goods or services; they collect revenue that is used to pay service providers.
When an agreement falls outside the NCA and is silent on interest, then the provisions of the Prescribed Rate of Interest Act apply, and interest is charged at the prescribed rate, which is currently 15.5 percent a year (straight, not compounded).
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