According to the National Credit Act, consumers have the right to settle their debts early

2014-02-11 00:00

CONSUMERS have a right to settle their debts early and save the cost of interest, credit life insurance and other fees, according to the National Credit Act.

But as Pietermaritzburg consumer Angelina Green discovered, despite this empowering legislation, it seems consumers sometimes still have to fight an uphill battle to realise this right.

Fortunately, her story has a happy ending, which shows that it pays to know and demand your consumer rights.

Green bought a fridge and bedroom suite from Lewis Stores’ Church Street branch on a 36-month credit instalment agreement last July, but turned to Witness Crusaders after the retailer’s staff allegedly refused to entertain her early settlement request.

“I have an account with Lewis Stores’ Church Street branch. I pay my account on time, and I’m three to four months ahead with my instalments,” Green said.

Green said she had since last August repeatedly asked Lewis branch staff if she could settle the debt earlier by September 2014. However, she claimed that they had refused.

Green’s principal debt was R18 886, but over the life of the agreement she would end up paying double, a whopping R38 184.

“My understanding according to the National Credit Act is that a customer has the right to pay off their debt early,” Green said.

“This is not the case with Lewis and as far as they are concerned, I have to pay R1 067 for the next 36 months.”

“I went in many times to rectify this problem, but no one seems to understand what I’m talking about,” Green said. “All I’m told is that ‘head office set up the system, phone them and they will help you’.”

However, when Green said she called head office and demanded her right to pay off her debt early, staff members responded saying, “it doesn’t work that way”.

“Sad to say, I’ve got no help to date … I want them to follow the NCA that allows customers to pay off their debt in the time they want to pay it off,” Green complained.

Green’s understanding is correct, as this right is enshrined in section 125 of the NCA (see sidebar) according to debt counsellor Deborah Solomon, founder of the DCI debt portal. Solomon said retailers obviously stood to lose profits when consumers choose to realise this right.

I contacted Lewis and asked them to investigate Green’s case and to comment on the store’s alleged violation of the NCA.

Lewis’s call centre manager Judy Isaacs responded saying two senior managers had contacted Green last week following my query.

“Ms Green did not have a clear understanding of how instalment sale agreements are configured in terms of the New Credit Act — this was explained to her. Ms Green has confirmed that she fully understands and that she is satisfied,” Isaacs responded.

Asked what Lewis’s policy is regarding early settlement and the consumer’s allegation that the NCA had been violated, Isaacs said the retailer was “committed to the ideals and principles” of the NCA and conformed to the legislation.

“In terms of the new credit act, any customer has the right to early settlement of the agreement, and no employee of Lewis Stores will ever refuse the customer the right to do so,” Isaacs said.

“An early settlement figure is displayed on the account each day, should the customer wish to settle at that moment in time.”

However, she said Green’s request to settle in September 2014 made it “nigh impossible” to furnish a settlement figure as this would be “totally dependent on the customer’s payment profile and the interest calculated”.

In other words, if the consumer paid late or overpaid, the final interest figure would be affected. Granted, but in my view, the staff could have told the customer that she did have a right to settle early and that she should continue paying extra into the account. In the end, Green confirmed that Lewis did an about turn last week and agreed to an early settlement.

“The final score was my debt would be treated as a cash sale and I have to pay the balance of R6 000 over two months,” Green said.

“I feel vindicated because it took your intervention to make them realise that consumers do have a right and control over their debts.”

Solomon advised consumers to report such cases to the National Credit Regulator. Visit the NCR website at

• Send your consumer issues to Lyse Comins at

Your right to settle debt early

THE National Credit Act enshrines the consumer’s right to settle debt early, with or without advance notice to the credit provider. The amount required to settle a credit agreement is the total of the following:

• the unpaid balance of the principal debt; and

• the unpaid interest charges and all other fees and charges payable up to the settlement date.

Consumers must give three months notice before settling a large credit agreement, such as a home loan, early as the NCA allows credit providers of large agreements to slap consumers with a penalty of three months interest on the outstanding balance, or the difference between the notice period given and three months.

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