Personal Loan Calculator ☆ Stoor

The legal maximum on a South African personal loan

Personal loans are unsecured credit transactions under the National Credit Act, and the interest rate is capped by law. The cap is not a fixed number — it moves with the repo rate:

Unsecured credit: repo + 21 percentage points. At the current repo rate of 7.00%, that is a maximum of 28.00% per year.

Be careful where you read this — a lot of sites are wrong

You will find South African pages quoting caps of 24.85%, 22.65% or higher. Those come from a formula that was repealed on 6 May 2016 — the old repo × 2.2 + a margin calculation. It was replaced by the current repo + a margin structure under the Limitations on Fees and Interest Rates Regulations.

Sites still computing the dead formula publish a number that has not been law for years. If a lender or comparison page quotes you a cap based on multiplying the repo rate, it is out of date.

The other caps, for context

The fees are capped too — and they are where the cost hides

The rate is only part of what you pay. The NCA caps these as well:

• Initiation fee: R165, plus 10% of the amount above R1,000 — capped at R1,207.50;
• Monthly service fee: R69;
• Credit life insurance: R4.50 per R1,000 of cover, per month. The "per month" is easy to miss and materially changes the total.

On a small loan the initiation fee and credit life can rival the interest. That is why comparing on the advertised rate alone is misleading — compare on the total amount repayable.

The question to ask before signing

"What is the total amount I will repay, including all fees and credit life?"

Every registered credit provider must give you a pre-agreement quotation showing exactly that. Take it away and check it in the calculator above. A lender reluctant to produce it in writing is telling you something.

Your rights under the NCA

• Affordability assessment is mandatory. A provider must reasonably assess that you can afford the repayments — reckless lending is prohibited, and an agreement found reckless can be set aside;
• Check the provider is registered with the NCR. An unregistered lender operates outside these protections entirely;
• You can settle early. Ask what early settlement saves — on longer terms it is substantial;
• Credit life is often compulsory, but you can generally substitute your own policy of at least equivalent cover. Ask — the in-house policy is rarely the cheapest;
• You have a right to your credit record, free once a year. Check it before applying, because errors are common and they change your rate.

Before you borrow at all

Test the instalment against your genuine take-home pay — the income tax calculator gives the real figure after PAYE and UIF, and the affordability calculator checks whether it fits alongside existing commitments.

If you are borrowing to cover existing debt, work the plan first with the debt payoff planner — consolidation only helps if the new total repayable is genuinely lower, which is less often than the advertising suggests.

Frequently asked questions

What rate should I enter in the calculator?

Whatever the lender quoted you. If you are exploring, note that the legal maximum on unsecured credit is currently 28.00% — many borrowers are offered less based on their credit profile, which is exactly why checking your record first pays.

Why is my quoted rate so much higher than prime?

Prime (currently 10.50%) is the benchmark for secured lending like bonds. Unsecured personal loans carry no security, so they are priced far higher — up to the 28% cap.

Is credit life insurance compulsory?

A provider can require cover, but you can usually substitute your own equivalent policy. Ask, and compare — at R4.50 per R1,000 per month, it adds up.

Can a lender charge more than the cap?

Not on a new agreement. Note that agreements predating May 2016 can carry legacy rates above today's ceilings, which is why some old accounts look unusually expensive.

How do I check a lender is legitimate?

Verify registration with the National Credit Regulator directly, from a source you found yourself — not a link the lender sent.

NCA caps are per the Limitations on Fees and Interest Rates Regulations (GG 39379, in force 6 May 2016), applied to the current 7.00% repo rate. Rates move with the repo — recheck after any SARB decision. General information, not financial advice.