A loan can go a long way to solve your debt problems. But it can also make matters worse if you don’t pay close attention to the terms of the credit agreement.

A credit agreement is a binding contract between you and the credit provider. This means that you and the company have specific rights and responsibilities in terms of the agreement. As you can end up in legal trouble if you break any of the conditions in the agreement, it is very important that you know what you are signing.

Here are 10 tips to keep in mind before you sign a credit agreement.

1. Understand what you sign. This means every word in the agreement. “I didn’t know” is not an excuse when you break the contract.
2. Ask as many questions as you need to understand the agreement. Don’t accept it when the agent tells you something is a standard clause – ask him or her to explain it to you.
3. Don’t sign immediately. In terms of the National Credit Act, you have five days to think about the agreement before you sign it.
4. Ask advice if you need to. If you are unsure about anything in the agreement and the agent cannot give you a proper explanation, get an informed opinion from someone with a legal background.
5. Check that all your personal details are correct. Pay special attention to the contact details in the contract. If these are not correct, the credit provider will not be able to communicate with you and you won’t get your monthly statements.
6. Make sure that the agreement states the full cost of the loan – the capital amount, the interest, and all other fees and charges – and that all the costs are in line with the National Credit Act.
7. Check that the agreement clearly states your rights as a consumer, eg, early settlement of the loan and getting debt counselling.
8. Make sure that you do not automatically give permission to be included in mass marketing campaigns from the company. The contract must give you the option to choose to receive marketing material.
9. Make sure you understand the credit life insurance linked to the agreement. You have to know what the policy does and does not cover, and what your instalment is.
10. Now that we know what you should do before signing a credit agreement, here is one thing you SHOULD NOT do: pay any money. If the agent asks you to pay a fee, ask him or her to show you where it is stated in the contract. Also, ask to clarify the matter with the agent’s supervisor. Asking for a fee that is not clearly stated in the credit agreement is, in effect, theft. Do not fall for it, and report such requests through the credit provider’s anti-fraud telephone line or email address.