A friend has a registered Credit Company. He paid off a debt for me in excess of R300 000 which I could not afford to do at that point in time. At the time he said he would charge 5% interest per month and if not repaid after 6 months an additional 2%. I expressed my concern at the high interest rate but there was no real response. However the debt in the mean time had to be, and was, paid.

After some months I received an Acknowledgement of Debt Agreement and a Cession Agreement over the whole of my immovable property - a farm -on sale - it was on the market at the time and worth substantially more than the loan and still is. The Cession Agreement was to become operative if the property was not sold by some 9 months after the debt was paid off.

I did not like the conditions of the contract so I never signed. However it has always been my intention to pay back the loan at a fair rate. It is some 2 years later and we need to settle. The loan has never been formalised and I have never received a statement or serviced any part of it. The question is what is a fair rate in terms of the law? He is still holding out for 5% per month for the first 9 months plus 7% thereafter. Would that even be legal in terms of the NCR? Could this be termed a short term loan, at any point of the above transaction, in terms of the NCR? Many thanks.