When you want to take out a loan, it is important to read the paperwork that comes with applying for credit. Make sure to read and understand the terms and conditions, and know exactly what you are signing up for. When you apply for a loan, the credit provider has to give you a pre-agreement statement and quotation. The statement sets out the terms and conditions of the loan contract the credit provider is offering you.
The quotation lists all the costs that will be added to the principal amount you want to borrow. The National Credit Act (NCA) says that credit providers must tell you about and explain the total cost of credit to you so that you understand it.
You do not have to accept the offer in the pre-agreement. You can take five business days to consider it. If you are not interested, you do not have to take any action. The quotation is valid for five business days. This means that you have time to consider whether or not you should enter into the proposed credit agreement. You can make this decision once you have an understanding of the cost implications (and your own affordability). Before the expiration of the five-day period, you may hold the credit provider to the terms and conditions as disclosed in the pre-agreement statement and quotation.
Here are terms you will often find in many pre-agreements and quotations:
Read our next article which will highlight the important terms and conditions that you should understand in your credit pre-agreement.