What is a Credit Agreement in South African Law?

A Credit Agreement is a contract between a lender and a person or party borrowing money. It must be that there has been money lent, and the payment of an amount owed is deferred, and interest is levied as the cost of lending money.

Credit agreements are legally binding on the signing parties and are a common business process for securing various types of loans, including mortgages, credit cards, auto loans, and others. These are contracts that outline how much money is borrowed, the annual interest rate, how the interest is applied to outstanding balances, any fees associated with the account, the duration of the loan, the payment terms, and any consequences for late payments.

Who can enter into a Credit Agreement in South Africa?

Any natural or juristic person in South Africa can be a party to a Credit Agreement if they meet the requirements and affordability checks set out by the borrower. The National Credit Act applies to credit agreements concluded with a consumer or small business with a turnover of less than R1million per annum.

Unless a small business enters into acquires credit over R250 000. Registered and unregistered credit providers must present lenders with formal credit greements.

Institutional Credit Agreements are typically negotiated by a lead underwriter, however, all parties involved must be agreed and sign the contract, and in most cases, it must be filed with the Securities Exchange Commission.

Choose Greyvensteins Attorneys to Assist with your Credit Agreements

Greyvensteins Attorneys advise clients on multiple factors of asset-based lending, asset finance and also provide support throughout the process of acquiring credit and underwriting, drafting the facility agreement and covering all bases for putting security in place.

We are based in Johannesburg, Cape Town and Port Elizabeth, and our attorneys can support you starting with the credit and underwriting process, drafting the facility agreement and making sure security is in place. We regularly advise clients on multiple factors of asset finance and asset-based lending.

Greyvenstein Attorneys can assist entities that lend money to others to formally register with the National Credit Regulator.

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