Loan Bank of South Africa journal
Know when the five-day cooling-off right applies to credit
People often assume every credit agreement comes with a few days to change their mind. Under the National Credit Act, the right to rescind is narrower than that. Knowing exactly when it applies helps readers in Braamfontein avoid relying on a cooling-off period that may not exist for their agreement.
By Loan Bank of South Africa editorial · · 2 min read
Which agreements are covered
Section 121 of the National Credit Act applies only to a lease or an instalment agreement that was entered into somewhere other than the credit provider's registered business premises. An instalment agreement is typically used when goods are bought on credit and paid off over time. A personal loan, a credit card or an agreement signed at the provider's own premises does not fall under this particular right.
Check where you signed and what type of agreement you signed. Both details appear in your documents and both determine whether the right is available.
How the right works
If the right applies, you may end the agreement within five business days after you signed it. The notice must be in writing and can be delivered by hand, fax, email or registered mail to the address given in the agreement, or to the provider's registered address if the agreement does not give one. Keep proof of when and how you delivered it.
You must also offer to return any money or goods you received under the agreement, or pay in full for services already received. The credit provider must refund money you paid within seven business days after receiving your notice. It may charge the reasonable cost of having goods returned and restored to saleable condition, and a reasonable rent for the time you had them, unless the goods are still in their original packaging and apparently unused.
Use the days well, or before signing
Business days exclude weekends and public holidays, so count carefully from the signing date. If you think you may want to cancel, write the notice as soon as possible rather than on the last day. Keep the goods in good condition and in their packaging where possible.
The more reliable protection is to read the agreement before you sign it. Ask for the pre-agreement statement and quotation, take it home and compare it with your budget. A cooling-off right is a safety net for a narrow set of agreements, not a substitute for a careful decision.
Cooling-off checklist
Check these points the day you sign, not later.
- Is it a lease or an instalment agreement?
- Was it signed away from the provider's registered premises?
- Count five business days from the signing date.
- Deliver written notice and keep proof of delivery.
- Offer to return the goods or money you received.