How the calculator works
The National Credit Act does not let a lender charge whatever it likes. Interest, the once-off initiation fee and the monthly service fee each have a legal maximum, set in the National Credit Regulations. The calculator adds those maximums up for the amount and the term you enter. The result is a ceiling, not a quote: a lender may charge less, never more.
Short-term loans
A loan of up to R8 000 that you repay within six months is a short-term credit transaction. Interest may be at most 5% a month on your first such loan in a calendar year and 3% a month on later ones. For a term in days the calculator spreads the monthly cap over the year (5% × 12 ÷ 365 a day) and assumes you repay everything in one payment at the end, which is the most expensive way to repay.
Longer and larger loans
Anything above R8 000, or repaid over more than six months, is an unsecured credit transaction. Its interest cap moves with the Reserve Bank: the repo rate plus 21% a year. With the repo rate at 7.25% that is 28.25% a year. The calculator assumes equal monthly instalments, the way most personal loans are repaid.
The fees
The initiation fee may be at most R165 plus 10% of the amount above R1 000, and never more than R1 050. The service fee may be at most R60 a month. The regulations do not say whether these caps include VAT, so the calculator shows VAT at 15% on the fees separately and includes it in the maximum.
What does a R5 000 loan cost?
At the legal maximum, R5 000 repaid in one payment after 30 days may cost at most R965.33: interest R246.58, an initiation fee of R565.00, a service fee of R60.00 and VAT on the fees of R93.75. You repay at most R5 965.33.
Spread over six months, the most the same R5 000 may cost is R2 563.75, R7 563.75 repaid in all. These are ceilings: a lender may charge less, never more, and it must show you the exact figures in a quotation before you sign.
What is not included
Credit life insurance, if the lender requires it, has its own cap in separate regulations and comes on top. Default charges and collection costs only apply if you miss a payment. If you settle early, you pay less interest: by law you may repay a loan at any time.
Sources
National Credit Regulations, regulation 42 (maximum interest and initiation fees) and regulation 44 (service fees), as amended in 2016. Repo rate 7.25% as set by the South African Reserve Bank from 24 September 2026. Figures checked on 7 October 2026. This is general information, not financial advice.