Short-term loan fee calculator
On small South African loans the fees, not the interest, are the main cost. This tool isolates them: the once-off initiation fee, the monthly service fee, and the 15% VAT that applies to both — with the proportion of the total that is fee rather than interest.
Rates and fees use the NCA caps for short-term credit agreements: interest 5%/month (3% repeat), initiation fee R165 + 10% of the amount over R1 000 (max R1 050), service fee R60/month, VAT 15% on fees.
| Principal — what you receive | R3 000 |
|---|---|
| Interest (5%/mo × 3 months) | R450 |
| Initiation fee | R365 |
| Service fee (3 × R60) | R180 |
| VAT on fees (15%) | R82 |
| Total cost of credit | R1 077 |
How the initiation fee is built
The initiation fee is R165 on the first R1 000 you borrow, plus 10% of every rand above that, capped at R1 050 — all excluding VAT. That cap is only reached at R9 850, which is above the R8 000 ceiling for short-term credit, so on a short-term loan the cap never actually binds.
It is charged once per agreement. That single fact is why two R2 000 loans always cost more than one R4 000 loan of the same length: you pay the initiation fee twice for the same money in hand.
The service fee is different — R60 a month before VAT, charged for every month the agreement runs, regardless of how much is outstanding. It is what makes extending a term more expensive than it first appears.
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.
Check the VAT treatment on your quote
Fee caps are published excluding VAT, but what leaves your account includes it. A R60 service fee costs you R69, and a R1 050 initiation fee costs R1 207,50. If a quote shows fees that look like the exact cap figures, ask whether VAT is included or still to be added.
Check these three things before you sign — here or anywhere
- The lender’s NCRCP number is published on its own site, and it checks out in the National Credit Regulator’s register.
- The pre-agreement quote breaks out the total cost of credit: interest, initiation fee, service fee and VAT — as one figure you can compare.
- Nobody asks you for an upfront “release fee”. A registered credit provider never charges you before it pays out.
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.