NCA Interest Rate Caps: The Maximum a Lender May Charge in South Africa
The National Credit Act caps every rate and fee on regulated credit. Here is the full picture in one place — so you can spot an illegal quote instantly.
Maximum interest rates by credit type
| Credit type | Maximum interest rate | At repo ≈ 7% |
|---|---|---|
| Short-term loan (≤ R8 000, ≤ 6 months) | 5% per month (first loan of the year) 3% per month (repeat loans, same year) | 5% / 3% per month |
| Unsecured personal loan | Repo rate + 21% per year | ≈ 28% per year |
| Credit facility (credit card, overdraft) | Repo rate + 14% per year | ≈ 21% per year |
| Secured credit (e.g. furniture finance) | Repo rate + 17% per year | ≈ 24% per year |
| Developmental credit | Repo rate + 27% per year | ≈ 34% per year |
| Mortgage | Repo rate + 12% per year | ≈ 19% per year |
The repo rate is set by the South African Reserve Bank and changes over time — the rand caps above move with it. A lender may always charge less than the cap; competition is exactly why comparing offers saves money.
Maximum fees
| Fee | Legal maximum | When charged |
|---|---|---|
| Initiation fee (unsecured credit) | R165 + 10% of amount above R1 000, capped at R1 050 | Once-off, at start |
| Service fee | R60 per month (excl. VAT) → R69 incl. VAT | Monthly |
| Credit life insurance (unsecured) | R4.50 per R1 000 of the deferred amount | Monthly, if required |
| Default admin charge | Per Magistrates' Court tariff | Only after default |
| Collection costs | Capped by in duplum rule | Only after default |
Worked example: is this quote legal?
Say you're quoted the following on a R5 000 loan over 3 months (first short-term loan this year):
- Interest: 5% × 3 months = R750 → legal (at the cap)
- Initiation fee: R165 + 10% × R4 000 = R565 → legal
- Service fee: R69 × 3 = R207 → legal
- Total repayment: R5 000 + R750 + R565 + R207 = R6 522
If the same quote showed, say, "R1 500 admin fee" or interest of 8% per month, the agreement would breach the NCA — walk away and report the lender to the National Credit Regulator. Check any quote yourself with our loan calculator.
The in duplum rule: your debt can't run away
Section 103(5) of the NCA contains one of the strongest consumer protections in South African law: once you default, all interest, fees and collection costs combined may never exceed the unpaid principal at the time of default. In practice, a R3 000 debt can never legally grow beyond R6 000 no matter how long collection takes.
Spotted a quote that breaks these caps? It is unlawful and unenforceable. Report the lender to the National Credit Regulator at ncr.org.za or call 0860 627 627.
Other key protections
- Pre-agreement quote — you must receive a quote showing every cost, valid for 5 business days, before signing.
- Affordability assessment — lending without properly assessing affordability is "reckless credit" and a court can suspend or set aside the agreement.
- Early settlement — small and intermediate agreements can be settled early with no penalty.
- Cooling-off — agreements signed away from the lender's premises may be cancelled within 5 business days.
- Marketing rules — negative option marketing and certain unsolicited credit increases are prohibited.
Get matched with lenders who play by the rules
Every lender on LoanNow is NCR-registered and NCA compliant.
Frequently asked questions
Can a registered lender charge more than these caps?
No. The caps are law. Any clause charging more is unlawful and unenforceable, and the lender risks its NCR registration. Report violations to the NCR.
Do the caps apply to loans from friends or informal lenders?
The NCA applies to credit providers acting in the course of business. Informal "mashonisa" lenders operating without registration are illegal — and you have no NCA protection dealing with them. Stick to registered lenders.
Where can I verify a lender is registered?
Search the National Credit Regulator's registrant database at ncr.org.za, or ask the lender for their NCRCP registration number and verify it.