How a PERSAL deduction works
When a lender has a PERSAL deduction code, the instalment is taken from your salary before it reaches your bank account and paid to the lender by the payroll office. You sign the authority for the deduction when you take the loan. Because the lender is paid first, some lenders offer public servants longer terms or larger amounts than they would on a debit order.
The deduction shows on your payslip under the lender's name. Check it every month for the first few months, and again when the loan should be paid off, so that a deduction never runs longer than it should.
Who may deduct from a government salary
Under the Treasury Regulations, only the Accountant-General may approve a deduction code. For a loan code, the applicant must be a registered lender, must keep the code to itself rather than give brokers access, must be in good standing with SARS and accepts audits and oversight by National Treasury.
Anyone who asks for your PERSAL number and banking details to arrange a deduction without a written loan agreement from a registered lender is not following these rules. Check every lender on the National Credit Regulator's register before you sign.
The limits on what can come off your salary
Treasury Regulation 23 groups payroll deductions into benefit, collective agreement, state, statutory and discretionary deductions. Discretionary deductions — the ones you choose, such as loans and insurance — may not exceed 40% of your basic salary, which is your annual notch divided by 12, without overtime or allowances.
Within that 40%, insurance premiums may take at most 15% and other discretionary deductions, including loans, at most 25%. A minimum take-home pay also applies. The Accountant-General may allow more only where refusing would seriously prejudice the employee, and then only for a limited time.
Affordability still decides
A deduction code does not replace the affordability check. Every registered lender must look at your income, your existing deductions and debt repayments and your living expenses before it lends, and lending to someone who clearly cannot afford it is reckless credit under the National Credit Act. A payslip that already carries several deductions is often the reason an application is declined.
Compare a payroll loan with an ordinary personal loan on the total you repay, not on how easy the deduction makes it. The legal caps on interest and fees are the same either way. If your deductions are already close to the limits, debt counselling may help more than another loan.
Comparing loans as a public servant
Our page on personal loans for government employees lists registered providers that lend to public servants, with their amounts and terms, and explains what to check before you sign. If a creditor has gone to court to take money from your salary instead, read how garnishee orders work and what limits apply.