How the calculation works
South African payday and short-term loans (up to R8 000, max 6 months) are priced under the National Credit Act 34 of 2005 and its fee regulations. A lender may charge at most:
| Component | Legal maximum | Example: R3 000 / 30 days |
|---|---|---|
| Interest | 5%/month first loan · 3%/month repeat | R150 |
| Initiation fee | R165 + 10% of amount over R1 000 (max R1 050) | R365 |
| Service fee | R60 per month (or part thereof) | R60 |
| VAT | 15% on fees | ±R64 |
| Total repayable | — | ±R3 639 |
Two useful consequences of these rules:
- Small loans carry proportionally heavy fees. On R500 for 30 days, fees can exceed the interest several times over — borrow only what you truly need.
- Your second loan in a year is cheaper. The interest cap drops from 5% to 3% per month on repeat short-term loans in the same calendar year.
Compare before you commit
These are maximums — actual pricing differs between lenders, and the cheapest lender for R1 000 over 2 weeks is rarely the cheapest for R8 000 over 6 months. Compare your matched offers side by side before signing anything, and read your NCA rights so you know what the pre-agreement quote must disclose.