When a seller agrees to provide a buyer with goods or services within the meaning of an agreement that defers the buyer`s obligation to pay the costs of the merchandise and must pay the seller any tax, fees or interest on the deferred charges, the buyer and seller have entered into a “credit contract”. In this economic climate in South Africa, many consumers choose to enter into temperable sales contracts as a plausible means of buying property or real estate. In the spirit of a catch-up time purchase agreement, the property is booked and payment is deferred and the deferral must be made since the customer must pay the purchase price in increments. 5. And finally, of great importance, is the fact that, if interest were to be levied on rates as one would expect, and the purchaser is a consumer under the National Credit Act, then all NCA requirements will apply as well. When it comes to selling real estate, a tempes sale is the best way to use real estate without mortgages and if the seller is willing to finance the buyer`s purchase. This creates a constant flow of income over a number of years for the seller and allows the sale to be taxed for years and not immediately at the time of sale. The sale is also useful in case of sale of assets or large companies. An example of such a transaction is when a customer buys a car for about R500,000. He must pay the purchase price in increments. Interest is deducted, payment is deferred and ownership is booked until final payment. The customer pays the purchase price of R500,000 plus interest in increments until the full amount is paid to the seller so that the transfer of ownership can take place. These types of sales can also help prevent the taxation of social security benefits by keeping income low.
The benefits of not recognizing the entire sale may also contribute to a person still being able to benefit from the full interest deduction on student loans, break down deductions or make other income-limited deductions. Therefore, sellers should avoid sales contracts with individuals or small businesses, for a fee, fee or interest payable to the seller, otherwise the provisions of the NCA apply to the seller and the temperance purchase contract itself. These provisions can be cumbersome, including registering as a credit provider with the national credit regulator, implementing robust financial affordability assessments for borrowers, using NCA-compliant documents and agreements, enforcing NCA collection procedures, etc.