Short-Term Loans in South Africa: Maximum Interest, Fees and What They Really Cost
A short-term loan in South Africa is an unsecured loan of up to R8,000 that must be repaid within six months. Because these loans are regulated, there are legal limits on the interest and fees a registered lender may charge, and any lender who charges more is breaking the law. The first table shows the limits, and the second shows what a one-month loan could cost at those maximums compared with the rates reported for mashonisas. Use it to check any quote you receive.
| Item | Legal Limit for Short-Term Credit |
|---|---|
| Loan size and term | Up to R8,000, repayable within six months |
| Maximum interest | 5% per month on the first loan in a calendar year, and 3% per month on later loans in the same year |
| Initiation fee | R165 plus 10% of the amount above R1,000, capped at R1,050 |
| Monthly service fee | Up to R60 |
What a one-month loan could cost
| Amount Borrowed | Registered Lender (maximum legal cost) | Mashonisa at 30% a Month | Mashonisa at 50% a Month |
|---|---|---|---|
| R1,000 | R275 | R300 | R500 |
| R2,000 | R425 | R600 | R1,000 |
| R3,000 | R575 | R900 | R1,500 |
Illustration only. Registered lender costs combine the maximum 5% monthly interest, the maximum initiation fee and the maximum R60 service fee, and exclude any optional extras. Mashonisa figures are simple monthly interest at the example rates, and reported mashonisa rates range from 30% to 100% a month. Always ask for the total cost of credit in writing, and confirm current limits with the NCR. This is not financial advice. Compare registered lenders on easyonlineloans.co.za.
Sources
- Short-term loan interest and fee limits (Moonstone, MFSA)
- Interest rate caps and fee limits (JustMoney)
- Interest rates and the in duplum rule (MJK Inc.)
- Reported mashonisa interest rates (IOL)