INCLUSION OF INITIATION FEES IN THE DEFERRED AMOUNT

ncrINCLUSION OF INITIATION FEES IN THE DEFERRED AMOUNT

 

 

It has come to the attention of the National Credit Regulator that some credit providers include initiation fees

in the deferred amount of unsecured and short-term loans and levy interest on the deferred amount inclusive

of the initiation fees.

 

In terms of Section 102 of the National Credit Act, an initiation fee may be included in the principal debt

deferred under an instalment agreement, a mortgage agreement, a secured loan or a lease.

Where the consumer is unable to pay an initiation fee upfront on an unsecured or short-term loan, the credit

provider must reflect the initiation fee separately on the credit agreement and not charge interest on the

initiation fee.

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