This section details how to configure interest and fees for Short Term Credit Agreement Loan Products in South Africa, adhering to the National Credit Act (NCA) Regulations.

Interest

RSA: The rand amount of interest for any particular day is calculated as follows:

• For any credit agreement other than short-term credit transactions: (Deferred amount for the day * interest rate) / (Number of days in the year) where the number of days in the year may be interpreted as either 365, or as the actual number of days in the particular year.
• For short-term credit transactions: (Deferred amount for the day * monthly interest rate) / (Number of days in the month) where for short-term loans, the number of days in the month may be interpreted as either 30, or as the actual number of days in the particular month.

Regulation 42(1): Except for Short-term credit transactions and Incidental credit agreements, the annual interest rate should be calculated as: [(Repo Rate multiplied by Factor) + Percentage to add]

For Short-term credit transactions and Incidental credit agreements, the annual interest rate should be the monthly interest rate multiplied by 12.

• Initial First Interest Rate: Specify the initial first interest rate for this loan product (e.g., 5% per month on the first loan).
• Minimum First Interest Rate: Specify the minimum interest rate for this loan product (e.g., 5% per month on the first loan).
• Maximum First Interest Rate: Specify the maximum interest rate for this loan product (e.g., 5% per month on the first loan).
• Initial Subsequent Interest Rate: Specify the initial subsequent interest rate for this loan product (e.g., 3% per month on subsequent loans within a calendar year).
• Minimum Subsequent Interest Rate: Specify the minimum subsequent interest rate for this loan product (e.g., 3% per month on subsequent loans within a calendar year).
• Maximum Subsequent Interest Rate: Specify the maximum subsequent interest rate for this loan product (e.g., 3% per month on subsequent loans within a calendar year).

Initiation Fee

Regulation 42(2) of the Regulations: This regulation has been amended by substitution of "Table B".

"An initiation fee must only be charged when a new credit agreement is established with a consumer and must not be charged on a transactional basis where there is no new credit agreement with the consumer."

• Base Amount Percentage: R 165 per credit agreement.
• In Excess Percentage: Plus 10% of the amount in excess of R 1,000.00.
• Maximum Base Fee Amount: This is the amount that may be charged when the agreement does not exceed the "in excess amount" (R 165.00).
• Maximum Total Fee Amount: This is the amount that may never be exceeded (R 1,050.00).
• Maximum Fee Amount Percentage of Capital: This percentage is 15%. This enforces that any newly calculated initiation fees do not exceed this value's percentage of the principal debt. It can then be changed at the user's discretion. According to regulation 43(3), your Initiation Fee may never exceed 15% of your principal debt.
• Add Initiation Fee to Deferred Amount: Select this checkbox if the initiation fee must be added to the deferred amount.

Service Fees

Regulation 44: This regulation has been amended.

(a) Substitution of the sub-paragraph immediately preceding sub-regulation (1): "The maximum monthly service fee, prescribed in terms of section 105 (1) of the Act,..."

(b) Addition of the following sub-regulations after sub-regulation (2): "(3) The service fee covers the cost of administering a credit agreement which is the operational cost of the credit provider such as rent, labour, communication, banking, processing of repayments and any other costs related to the administration of a credit agreement. (4) A service fee must be charged for a calendar month in which it is due and payable and on a pro rata basis where the credit agreement was concluded during the course of that calendar month."

• Initial Monthly Service Fee: Specify the standard monthly service fee for new loans, ensuring it is not more than what is allowed by the National Credit Act Regulations.
• Minimum Monthly Service Fee: You may specify a minimum monthly service fee less than the prescribed maximum amount.
• Maximum Monthly Service Fee: The prescribed maximum monthly service fee, according to the NCA regulations, is R 60.00.
• Charge First Monthly Service Fee: If you select this checkbox, the system will charge the first service fee in the first month in which the loan is granted. It is recommended that you do not select this box.
• Standard Monthly Service Fee: Specify the standard monthly service fee for new loans, not more than what is allowed by the National Credit Act Regulations.

When an annual service fee is levied, the applicable limit is:

• the monthly limit on the service fee, multiplied by 12; and
• where the period for which the fee is levied is less than 12 months, the monthly service fee multiplied by the number of months in such a period.

If a service fee is payable on a transaction basis, or a combination of periodic and transaction bases, the total of such fees may not exceed the monthly or annual limit. You are allowed to charge a service fee for every calendar month in the duration of the loan (amended Regulation 44(b)(4)). If the first calendar month is not a full month, the service fee has to be calculated pro-rata. This should, however, work from the agreement date.

• Charge Pro Rata First Monthly Service Fee: If you select this checkbox, the system will charge a pro-rata first month service fee.
• Charge Pro Rata Final Monthly Service Fee: If you select this checkbox, the system will charge a pro-rata fee in the final month.

A service fee must be charged for a calendar month in which it is due and payable and on a pro rata basis where the credit agreement was concluded during the course of that calendar month.

• Pro Rata Fee for the month: Daily Service Fee * number of days from when the credit agreement was concluded until the last day of the calendar month.
• Pro-rata service fees must be calculated for the month in which the credit agreement is concluded as well as the last month.
• The service fee covers banking and payment processing costs.
• Calculate pro rata fees: Daily Service Fees = Monthly Services Fees / number of days in calendar month.
• Pro Rata Fee for the month: Daily Services Fees = Monthly Services Fees / number of days in calendar month.
• Pro Rata Services Fees must be calculated for the month in which the credit agreement is concluded as well as the last month.

In Default Settings

• Allow Charging of Fees and Interest when "in Default": Select this checkbox if you want the system to charge fees and interest when the loan goes into default.

  RSA: Please take note of Section 103(5) which states: "Despite any provision of the common law or a credit agreement to the contrary, the amounts contemplated in section 101(1) (b) to (g) that accrue during the time that a consumer is in default under the credit agreement may not, in aggregate, exceed the unpaid balance of the principal debt under that credit agreement as at the time that the default occurs."

• Late Payment Grace Period: You can leave this value empty or 0. Specify the grace period, in number of days, after the final payback date, before "in Default" interest and fees are charged.

Buttons

• Cancel: Click to discard your changes and not save the information to the database.
• Save: Click to save the entered information to the database.
• Close: Click to close the request and return to the previous page.
• Save & Close: Click to save the information to the database and then close the screen, returning you to the previous page.