What loans can’t be reckless?

A consumer fined themselves to be over indebted when their total household income is less than the expenses and debt obligations each month. This also includes when a consumer cannot fulfill their monthly expenses in a timely fashion. Knowing what reckless lending is, is the first step, next… what loans can’t be reckless lending?

While many think that all types of credit can fall into this category, there are a few sorts that cannot be affected by the reckless lending classification.

Reckless lending does not apply to:

  • Juristic person – a social entity or an association of people which has an independent right of existence under the law. This means that a company or association cannot be a victim of reckless lending.
  • Pawn transactions – a special type of secured transaction. Pawn transactions have their own set of regulations, regulated by the Pawnbrokers Act
  • Incidental credit agreements – an agreement for the provision of goods and services over a period of time in terms of which agreement a fee, charge or interest becomes payable if the amount charged is not paid before a certain date or a lower price applies if the account is paid before a certain date after which a higher price applies.
  • Emergency loans – short term loans, eg Payday loans
  • Temporary increase in credit limit – a temporary increase that pushes you into over indebtedness