The National Credit Act rate caps
The National Credit Act does not set one interest cap — it sets different maximums for different categories of credit. Which cap applies to your agreement depends on what kind of credit it is, and your pre-agreement quote must tell you.
What you need to know
Short-term credit is defined by size and duration: R8 000 or less, repayable within six months. That definition is what triggers the 5% and 3% monthly caps and the capped initiation and service fees.
Cross either boundary and the agreement falls into a different category — unsecured credit, or credit facilities, or mortgage agreements — each with its own maximum expressed as an annual rate, generally linked to the repurchase rate.
The caps are maximums, not prices. A registered lender may charge less, and on longer agreements competition genuinely produces rates well below the ceiling. On short-term credit most lenders quote at or near the cap, which is why the term you choose matters more than the lender you choose.
Because these maximums are set by regulation and can be amended, confirm the cap applicable to your agreement on the quote itself rather than relying on any published summary, including this one.
What the National Credit Act allows a lender to charge
Maximums for short-term credit under the National Credit Act 34 of 2005. A registered lender may charge less — never more.
| Charge | Legal maximum | How it works |
|---|---|---|
| Interest — first loan | 5% per month | Applies to your first short-term loan in a calendar year. |
| Interest — repeat loan | 3% per month | Applies to further short-term loans taken in the same calendar year. |
| Initiation fee | R165 + 10% above R1 000, capped at R1 050 | Charged once, on the amount you borrow. Excludes VAT. |
| Service fee | R60 per month | Charged monthly for the life of the loan. Excludes VAT. |
| VAT | 15% on the fees | Added to the initiation and service fees — not to interest. |
Fee caps are published excluding VAT. With 15% VAT a R1 050 initiation fee costs you R1 207,50 and a R60 service fee costs R69 a month. Always compare the VAT-inclusive figure on your pre-agreement quote.
Related
Sources and last checked
- National Credit Act 34 of 2005 and its regulations — Government, as at 10 August 2026.
Page last checked 10 August 2026. Statutory caps and lender terms change — confirm anything you intend to rely on with the provider or the National Credit Regulator. Found something wrong? Tell us and we will correct it.