Maximum Interest

[srothman]

Probably a daft question, but what is the maximum interest that can be levied against credit?

e.g. if you have a loan of R1000, and interest accrues faster than you pay off the debt, and you reach a stage where the interest is 100% of the principle debt, i.e. the total outstanding debt is now R2000, what then? Is there ever a point where interest stops accruing on the principle amount?

 

[Messugga]

Probably a daft question, but what is the maximum interest that can be levied against credit?

e.g. if you have a loan of R1000, and interest accrues faster than you pay off the debt, and you reach a stage where the interest is 100% of the principle debt, i.e. the total outstanding debt is now R2000, what then? Is there ever a point where interest stops accruing on the principle amount?

When you declare bankruptcy?

 

[srothman]

When you declare bankruptcy?

Reminded me of this

[video=youtube_share;HprhRrrUFu0]https://youtu.be/HprhRrrUFu0[/video]

 

[rietrot]

Probably a daft question, but what is the maximum interest that can be levied against credit?

e.g. if you have a loan of R1000, and interest accrues faster than you pay off the debt, and you reach a stage where the interest is 100% of the principle debt, i.e. the total outstanding debt is now R2000, what then? Is there ever a point where interest stops accruing on the principle amount?

Yes there's some double rule like u described and the NCA does set upper levels on the interests percentage lenders can charge. Loads of proper articles can be found on this with a quick Google

 

[WAslayer]

Yes there's some double rule like u described and the NCA does set upper levels on the interests percentage lenders can charge. Loads of proper articles can be found on this with a quick Google

here is one..

http://city-press.news24.com/Personal-Finance/nca-amendments-what-they-mean-for-you-20160617

 

[srothman]

Thanks. Will go check it out, just wanted to find out if I'm scratching where there wasn't an itch, so to speak.

 

[Dee96]

There is a something called the in duplum rule

"The in duplum rule is a common law rule that provides that arrear interest ceases to accrue once the sum of the unpaid (accrued) interest equals the amount of capital outstanding at the time (and not the amount of capital originally advanced). "In duplum" directly translates to "double the amount""

 

[Dee96]

You can look at this also
https://www.pwc.co.za/en/assets/pdf/being-better-informed-2015-final.pdf

 

[srothman]

Thanks a lot, will check it out.

 

[Tman*]

Just remember, sneaky credit providers ALSO charge Lawyer fees, commissions, Admin fees (for each email, and telephone call), etc etc.

So, the duplum rule doesnrt really work in practice. There was an article a while back where a R1000 overdue furniture account (think it was Lewis) turned into R16 000.