New Credit Act – Making life difficult or Frek you Standard Bank
It’s been interesting seeing the effects of the NCA. I imagined that it would have some effect on the economy, but I didn’t realise it would be this big. There was an article in a newspaper saying that rejections of home loan applications had increased four fold. There was an interview on the radio with a gentleman who owns a second hand car dealership and he reckons their sales have halved because of financing applications being rejected.
The impact is that the salesmen are now not earning enough commission to support themselves. Estate agents are also going to be earning less commission. This should have an effect on the property market. In fact, the effects of the NCA should be felt by everyone in some way.
I have now been directly affected by it because I’m in the process of buying a car. My previous car was financed by Standard Bank and paid up a while ago, so I naturally approached them first. Luckily, before I spoke to them, I bumped into this article about the ‘initiation fee’ specified by the NCA, which is meant to replace ‘finance charges’. Apparently the maximum fee is R1140 and R57 per month, and Standard Bank has decided to apply the maximum fee across the board.
The nett result was that when I applied for my car finance, they informed me that because it’s a private sale they outsource it and the total charges will be about R5000 plus the R57 per month! So, for a R40 000 loan, they want to charge me R5000 and R57 per month which is about 20% of the interest charge per month (and over 36 months works out to another R2000).
That is absolute lunacy. The only people who would be prepared to pay that would be those who have no choice, that is those who can’t afford another option. So basically SB is taking advantage of the very people the NCA is supposed to be protecting. The interesting thing is that because they are so strict about who they lend to now, they will have less bad debt and shouldn’t need to charge these high fees.
It’s pure greed, I’m embarrassed to be a customer of Standard Bank. I have cancelled my finance application with them and am applying with Nedbank which does not charge these fees.