A loan quote gives you an interest rate "per year", but you repay monthly. Here's how the two connect, and what the law says a lender may charge.
From an annual rate to a monthly payment
South African lenders quote a nominal annual rate and charge interest monthly, so the monthly rate is the annual rate divided by 12. At 13.5% a year, that's 1.125% a month on whatever you still owe.
The repayment is set so that equal monthly payments clear the loan, interest and all, by the end of the term. Early on, most of each payment is interest; later, most of it reduces the balance. On R100,000 over five years at 13.5%, the repayment is R2,300.98 a month, and the interest over the five years comes to R38,059.21.
The legal maximum rates
The National Credit Regulations cap interest rates by type of credit, as a margin over the Reserve Bank's repo rate. With the repo rate at 7.25% (from 25 September 2026):
| Type of credit | Cap | Today |
|---|---|---|
| Home loans (mortgages) | repo + 12% | 19.25% |
| Credit cards and overdrafts | repo + 14% | 21.25% |
| Unsecured personal loans | repo + 21% | 28.25% |
| Developmental credit | repo + 27% | 34.25% |
| Vehicle and other instalment finance | repo + 17% | 24.25% |
| Short-term loans | 5% a month (first loan), 3% a month (later loans in the year) |
The caps move with the repo rate, and apply to agreements made from 6 May 2016.
Fees
- Initiation fee: on an unsecured loan, at most R165 plus 10% of the amount above R1,000, and never more than R1,050. On a home loan, R1,100 plus 10% above R10,000, never more than R5,250.
- Monthly service fee: at most R60.
Credit life insurance
If the lender requires credit life cover, its cost is capped too: R4.50 a month per R1,000 of the amount borrowed for most loans, and R2 per R1,000 for home loans.
Our loan repayment calculator checks a rate and fees against these caps. We don't offer credit or recommend lenders.
Sources
- Government Gazette 39379: review of limitations on fees and interest rates
- National Credit Regulator: Circular 8 of 2016
- National Credit Regulator: credit life insurance regulations
- South African Reserve Bank: MPC statement, September 2026
This is general information, not tax, legal or financial advice.