The Duplum Rule – The Duplam what?
Did someone mention dumplings? Not quite, but if you’re someone who gets a thrill from knowing every last thing about debt, your accounts and how interest works, then this is going to be a great appetizer!
The term “duplum” simply means double! In this case, it comes with a bit of trouble too. What are we referring to? The one where your personal loans are concerned and the interest on them specifically. When referring to the term duplam, we are referring to double the amount.
What does the in duplum Rule state?
South Africans have been privy to the experience of the in duplum rule for well over a century. This specific law was enforced and has been applied from as early as the thirties, and no, not the 1930’s, the 1830’s!
The reason it came about, was discussed at length and ultimately developed, was to officially and legally respond to the considerations of public interest. Furthermore, it was also designed to protect borrowers from being exploited in such a way that any financial provider might permit interest to accumulate unchecked.
The great element to this featured rule was that it didn’t only benefit the borrowers of funds, it even helped along with the lenders of the funds! It is applied in such a way that it encourages lenders to exercise their rights to be repaid both promptly and without any delay.
How exactly does the in duplam rule work?
This particular law ensures that the interest accumulated on the debt will cease to run the moment the total interest amount equals that of the amount of outstanding debt on your loan.
This law is also a part of the National Credit Act, which by the common law of all credit agreements includes the initiation fees, service fees, interest, any credit insurance costs and all or any other administration charges.
The adverse occurs when a payment has been made against your outstanding debt. So, it’s important to understand exactly how the in duplam rule works because as soon as a payment is made, the interest can start running again.
The reason for this is that post-payment on the outstanding debt would reduce the interest to an amount less than the in duplum limit, that being your remaining debt.
Does everyone encounter the in duplam rule?
Fortunately, not. It’s obviously entirely circumstantial, and many individuals might never need to partake in the ‘benefit’ of the in duplum rule. That said, it is still wise to understand how it works and how it could affect you if you ever did.
As we mentioned earlier, these kinds of laws and rules aren’t always known to the average Joe, but if you have a taste for all things financially legal, these little dumplings are worth knowing about.
One way to look at it is as a blessing really, or a saving grace if you will, purely based on the fact that you might have defaulted on your account or any loan repayments.
Not that we’re encouraging this scenario because it’s not good for you or the lender in question. But if you have been missing payments towards your loan and you land up having the interest amounting to the sum of your remaining debt, then you would be eternally grateful for the in duplum rule for being a knight in shining armour!
How will the in duplam rule affect my financial status?
Let’s say that you have found yourself in this position as mentioned earlier, and the in duplam rule applies. It would come into effect on your outstanding debt naturally, which means that your credit score would be harshly impacted in a negative way.
When it comes to not paying debt, there is no easy way around how it will affect you. Everything you do, don’t do or miss when it comes to the payments of your accounts, is recorded.
There is, therefore, no way to circumvent the in duplam rule affecting your credit record in the very same way. That is why even though you have some sort of saving grace with the in duplam rule, it’s best to avoid this situation altogether.
Only apply for credit if you can afford to repay it
When applying for a loan, make sure that your affordability meets the loan repayment requirement per month. If you can’t afford it, don’t apply for it.
You’re asking for trouble, duplam trouble, and no matter how much you try to climb out of it unless you come into a large sum of cash, then you’re going struggle to sort your finances out, duplam or no duplam.