The legal ceiling
Regulation 42 of the National Credit Regulations sets the most a lender may charge in interest on each kind of credit. For an unsecured credit transaction — the category most personal loans fall into — it is the repo rate plus 21% a year. With the repo rate at 7.25% since 24 September 2026, that is 28.25%.
When the Reserve Bank moves the repo rate, the ceiling moves with it. A loan with a rate linked to the repo rate changes too; a fixed-rate loan keeps the rate in its agreement for the whole term.
The other ceilings in regulation 42, for comparison: a mortgage (home loan) at most the repo rate plus 12% a year, 19.25% today; an instalment agreement or other credit, such as vehicle finance, the repo rate plus 17%, 24.25%; a short-term loan of up to R8 000 repaid within six months, 5% a month on the first such loan in a calendar year and 3% a month on later ones. Interest on a personal loan above R8 000, or over more than six months, falls under the unsecured cap.
Why your rate is not the advertised one
Lenders use risk-based pricing: the rate you are offered depends on your credit record, your income, the debt you already have, the amount and the term. Advertised rates are usually the lowest a lender offers, which only its strongest applicants get. Two people applying on the same day can be offered rates many percentage points apart.
That is also why an average rate says little about your own offer. The only rate that counts is the one in the quotation the lender gives you after it has assessed your application.
Rate, APR and total cost
The interest rate is only part of the cost. A lender may also charge an initiation fee — at most R165 plus 10% of the amount above R1 000, never more than R1 050 — and a monthly service fee of at most R60, with VAT. Credit life insurance, if required, comes on top. The annual percentage rate (APR) and, above all, the total amount repayable show the full picture.
For example, at the legal maximum a R20 000 loan costs at most R1 160.32 a month over 24 months, R29 271.17 in total; over 48 months the instalment falls to R759.91, but the total rises to R38 115.03. Our guide on the monthly repayment on a personal loan explains how the figures are worked out.
Comparing quotes properly
Before you sign, a lender must give you a pre-agreement statement and quotation showing the rate, every fee, the instalment and the total you will repay. Under section 92 of the National Credit Act, the quoted terms are binding for five business days, which gives you time to compare quotes from more than one lender.
Compare quotes for the same amount over the same term, on the total repayable. A lower rate with credit life insurance and a longer term can cost more than a slightly higher rate over a shorter term. Our guide on getting a lower rate lists what you can change on your side.
Seeing which lenders may consider you
Our page on personal loans in South Africa lists registered lenders with their amounts and terms, and shows the most a loan may cost at each size and term, so that you can hold any quote against the legal limit.