Saturday 14 May 2022

The Voice - Consumers Voice

Can they charge this much?

Is there any body that regulates loan agreements as in the amount of interest to be generated? I mean is it within the law for a loan of around P77,000 to be paid back as P286,000?

For clarity purposes an elder took a loan for P77,000 then he was told that he was to pay back the loan over 7 years at a monthly premium of around P3,400. Mind you the elder earns around P5,500. Another dubious part is there was around P9,000 was taken from the initial loan with unclear description as to what it is for, meaning that he did not get the actual P77,000. On top of that there were small fees amounting to roughly P600 termed as service fees. My question here is that can someone pay more than triple the principal? Why was the loan designed to take around 3/4 of the persons take home.

And why also was the form brought along to the signing without the whole document for them to read? This clearly shows that the agent wanted to hide some details for the elder to sign clueless.

You raise several important issues. Firstly, how much interest can a lender charge? The answer is simple. They can charge whatever they please. I don't know of any law, regulation or rule that limits interest rates. However, there is one limit that everyone should know about. This is a thing called the 'in duplum' rule. This rule says that when a debt is settled, the amount of interest paid must not exceed the capital amount remaining. But the important issue is that this only applies if a debt is finally settled in one payment, not if it's paid over many years.

Secondly, the maths is correct. Seven years is 84 months and 84 x 3,400 is P285,600. However, that seems an enormous amount to repay to me. If these figures are correct, this person is paying an annual interest rate of over 50% and that is scandalously high. While that's not illegal it's certainly immoral.

Finally, there's the affordability issue. Lenders should be checking how affordable a loan will be before they give someone the money. Any loan that takes more than half of someone's income is clearly not going to be affordable and it's reckless of any lender to offer it.

I suggest that your elderly friend contacts NBFIRA to see if the company lending this money is legitimate. I suspect something is very wrong here. 

When will they pay me?

Hello sir, I want to know where can I report an insurance company based in Gaborone. I was involved in a minor car accident in January and I submitted quotations even now the insurance company has not helped me.

I have been told 2 months back that the assessor is coming to assess the car and the quotation. The quotes I submitted were valid for a month and now they are invalid. I requested they refund me my subscription money because they can't help me.

The car insurance was for the value of 300k, every year I paid 12,000 annual and another 12,000 this year. I never defaulted and this was supposed to be my first claim.

This is completely unacceptable. When someone submits an insurance claim there's obviously a process to go through but there's no way it should take this long. I could understand if it took a week or two to fill in forms, get quotations for repairs, sort out arguments with the other parties involved but four months is ridiculous.

You sent me the contact details of the person who sold you the policy and it's important to understand that he was an insurance broker, he didn't work for an insurance company. His job was to find the best policy from the best insurance company that best suited your needs.

I hope this is just a result of this insurance broker being inefficient. The bad news is that it might be something more serious. There's a chance that you never had insurance at all. This wouldn't be the first time we've heard of an insurance broker who sold a customer a policy and then took the monthly payments but never actually passed them to the insurance company.

I've tried contacting the broker but he doesn't seem to want to talk. I'll speak to NBFIRA instead. You should too.

UPDATE: It seems that the broker never opened the insurance policy. NBFIRA have been informed.

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