What is Reckless Lending

If you’ve entered a credit agreement as a South African consumer, you will know that there are certain steps that would have been followed before you were granted the credit, store card or loan you applied for. These are necessary steps that include a detailed credit assessment to determine whether or not you are eligible for the credit, based on your income, expenses and affordability. Unfortunately, Reckless Lending is not an uncommon occurrence and more and more consumers fall victim to this through the hands of untrustworthy lenders.

At Debtco Group, our team make a point of ensuring that our clients have not fallen victim to cases of Reckless Lending, at the hands of one of more lenders. Reckless Lending happens when a creditor does not conduct the necessary assessments of your financial state, before providing you with credit. Reckless Lending can have terrible consequences for you, and can negatively impact your credit score and financial well-being. If a credit provider allowed you to obtain credit after their credit assessment indicated that you could not afford the credit, or that the credit you were taking on could potentially have left you over-indebted, then this would also be considered a case of Reckless Lending. Similarly, if you entered into a credit agreement without being made aware of the risks, costs and responsibilities you were taking on, then this would also indicate Reckless Lending.

In accordance with Section 48A and 81 (3) of South Africa’s National Credit Act, credit providers are obliged under law not to enter into a credit agreement with a consumer unless the reasonable steps have been taken to prevent Reckless Lending. These steps will ensure that you as the consumer fully understand the risks and costs you are incurring with the credit you require. These steps are also in place to ensure that you know your rights and obligations pertaining to the credit agreement. Credit providers should also assess your debt repayment history, existing credit agreements and current financial means, in order to fully consider your affordability.

If you are unsure whether you have been granted credit through Reckless Lending, it is important to note that Reckless Lending cannot apply to any agreements entered into before June 2007. Reckless Lending also cannot apply to cases of Emergency Loans, School/Student Loans, Incidental Credit Agreements, Public Interest Credit Agreements or Pawn Transactions. You also have to have been fully truthful during your credit application, for it to count.

As part of our comprehensive and professional Debt Review service, our Debtco Group team will investigate any possible cases of Reckless Lending, which may have contributed to you becoming over-indebted. We are committed to helping you out get out of debt, and will conduct a thorough investigation of your current credit agreements to make sure that your debt was not incurred through Reckless Lending.