Being granted a personal loan can be helpful for when you have a few financial challenges. While you get access to extra cash, this comes at a cost too- in the form of interest that is payable to the lending institution. This interest rate is what the lender charges you for giving you access to finance. This interest rate varies according to each lender.
The personal loan interest rate in South Africa usually depends on how a credit provider or bank scores you in terms of what you can afford and your credit history. The final rate is linked to the customer’s credit history and repayment track record.
In South Africa, you can’t be charged more than the maximum rates prescribed in the National Credit Act (NCA). For micro loans (no more than R8000 and payable within a maximum of 6 months) you can be charged interest of no more than five percent a month.
The four major banks in South Africa charge a personal loan interest rate in line with the National Credit Act, while also taking into account the personal creditworthiness of the individual applying.
Standard Bank offers personal loans at the prime lending rate, which is 10.50% (effective from March 2016).
Absa bank offers a personal loan price guarantee, which guarantees that if you obtain a pre-agreement statement and quotation issued to you that meets the qualifying criteria, Absa will give you a better interest rate than the competing loan offer.
By law, you are also entitled to a quote, which discloses the principal debt, interest rate, other credit costs and the total cost. A credit provider may also not increase your interest rate unless your credit agreement provides for a variable rate of interest. This should be clearly stipulated in your personal loan agreement.
