Credit Act would check high interest rates
May 29, 2008
The Government should enact a credit Act on money-lending institutions. This law would crack down on those who lend small amounts of money but charge a fortune in interest. Some micro-lenders now charge up to 30% in interest. New interest rates should, therefore, be set up.
Wanjala Masinde
The Government should enact a credit Act on money-lending institutions. This law would crack down on those who lend small amounts of money but charge a fortune in interest. Some micro-lenders now charge up to 30% in interest. New interest rates should, therefore, be set up.
The Act would allow one to receive one copy a year of their credit record free of charge. The Government can also determine the cost of the second record. The Act would also make provision for checking inaccurate information by credit bureaus. This would mean prejudicial information on debts that have already been cleared would be removed. Current information on debts or late payments would be kept on record for at least three years even if one has cleared their debt.
If one is struggling to pay their debt, they can seek the services of a debt adviser to draw up a repayment programme. They could also get a court order compelling their creditors to accept the programme. Debt advisers, lenders and credit bureaus, would have to be registered as a new body, and the credit regulator would investigate the complaints. This would allow one to accelerate their loan repayments without having to pay the penalty. If the loan is for a period of more than a year, they would be required to give notice.
When buying property, one would not need to accept the property-owners insurance from the bank that has given them a property loan. But if they buy cover from an insurer of their choice and their contract is successful, the contract must comply with the list of requirements and be drafted in a language they can easily understand.
The Act would also allow ones’ credit record not be passed on to the third party like employers.
Finally, companies offering credit would be heavily penalised for reckless lending. This refers to giving credit to people who cannot afford it. The companies would have to ensure that their prospective clients do not have many debts and that they can afford to repay them. But the onus would be upon the person applying for a loan to provide information about their debts and if they do not, they would not be protected.
The writer is a member of the Sharing Youth Centre
The Government should enact a credit Act on money-lending institutions. This law would crack down on those who lend small amounts of money but charge a fortune in interest. Some micro-lenders now charge up to 30% in interest. New interest rates should, therefore, be set up.
The Act would allow one to receive one copy a year of their credit record free of charge. The Government can also determine the cost of the second record. The Act would also make provision for checking inaccurate information by credit bureaus. This would mean prejudicial information on debts that have already been cleared would be removed. Current information on debts or late payments would be kept on record for at least three years even if one has cleared their debt.
If one is struggling to pay their debt, they can seek the services of a debt adviser to draw up a repayment programme. They could also get a court order compelling their creditors to accept the programme. Debt advisers, lenders and credit bureaus, would have to be registered as a new body, and the credit regulator would investigate the complaints. This would allow one to accelerate their loan repayments without having to pay the penalty. If the loan is for a period of more than a year, they would be required to give notice.
When buying property, one would not need to accept the property-owners insurance from the bank that has given them a property loan. But if they buy cover from an insurer of their choice and their contract is successful, the contract must comply with the list of requirements and be drafted in a language they can easily understand.
The Act would also allow ones’ credit record not be passed on to the third party like employers.
Finally, companies offering credit would be heavily penalised for reckless lending. This refers to giving credit to people who cannot afford it. The companies would have to ensure that their prospective clients do not have many debts and that they can afford to repay them. But the onus would be upon the person applying for a loan to provide information about their debts and if they do not, they would not be protected.
The writer is a member of the Sharing Youth Centre