Does the National Credit Act apply to my deal?

The National Credit Act 34 of 2005 applies to almost every credit agreement made at arm’s length in South Africa, but only if the agreement actually grants "credit" — meaning payment of money is deferred and a charge, fee or interest is levied for that deferral. If there is no deferral and no cost of credit, it is not a credit agreement at all. Three common exclusions also take an otherwise-qualifying deal outside the Act: where the consumer is a juristic person (company, close corporation or trust with more than two trustees) whose asset value or annual turnover is R1 000 000 or more; where the consumer is a large juristic person and the principal debt exceeds R250 000 (a "large agreement"); and where the parties are not dealing at arm’s length. A court decides whether the Act applies by the substance of the deal, not the label on the paperwork.

Does the NCA apply to loans to companies and other juristic persons?

Sometimes. A juristic person (company, close corporation, or a trust with more than two trustees) is exempt from the Act if, at the time the agreement is made, its asset value or annual turnover equals or exceeds R1 000 000. A juristic person below that line is treated more like a consumer, but even then the Act does not apply to a large agreement entered into by a large juristic person — that is, where the principal debt under a credit transaction exceeds R250 000. The two thresholds work together: above R1 000 000 the company is out of the Act entirely; below it, the company is in, except for large agreements over R250 000. Note that a natural-person surety for a juristic-person debt can still be protected by the Act even where the principal debtor is not.

What are the R1 million and R250 000 thresholds?

They are the two monetary thresholds set in the Determination of Thresholds (GN 713, GG 28893, 1 June 2006), and both remain current. The R1 000 000 threshold is the juristic-person exemption: a company, close corporation or large trust whose asset value or annual turnover is R1 000 000 or more falls outside the Act altogether. The R250 000 threshold is the "large agreement" line under section 7(1)(b): a credit transaction whose principal debt exceeds R250 000 is a large agreement, and a large agreement entered into by a large juristic person is excluded from the Act. Below R250 000 sits the intermediate band, and at or below R15 000 sit small agreements (along with any pawn transaction). These thresholds determine not only whether the Act applies but also which disclosure and formality rules attach.

Is invoice discounting a credit agreement under the NCA?

It depends on the substance of the arrangement, not its label. In The Profit Hub (Pty) Ltd v Zuwon Consultants (Pty) Ltd [2026] ZASCA 88 the Supreme Court of Appeal held that an agreement styled as invoice "discounting" was in substance a loan, because the client had to repay the advance plus a factoring fee whether or not its debtors paid, and gave suretyship security for that repayment. A true discount is a purchase of the debt, in which ownership and the risk of non-payment pass to the discounter; a loan is an advance that must be repaid with a charge. Once a deal is characterised as a loan, the NCA may apply — subject again to the consumer and the thresholds. In Profit Hub the agreements escaped the Act on two bases: the majority held the loans were not a credit facility at all, and in any event they were large agreements (each advance exceeded R250 000) made by a juristic person, which section 4(1)(b) excludes.

Must I register as a credit provider?

Almost certainly, if you grant credit agreements to which the NCA applies. Since 11 May 2016 the registration threshold has been nil: there is no longer a minimum number of agreements or value below which registration is excused. Anyone who, as a business, provides credit under agreements regulated by the Act must register with the National Credit Regulator. The duty turns on whether the agreement is a regulated credit agreement, so the threshold exclusions still matter — if all your lending is to large juristic persons above the R1 000 000 line, or consists only of large agreements over R250 000 with large companies, those agreements fall outside the Act and do not trigger registration. But occasional or once-off consumer lending no longer falls below a registration floor; the floor is zero.

What happens if a credit provider is not registered?

The consequences are drastic. Under section 89 of the NCA, a credit agreement entered into by a credit provider who is required to be registered but is not, is an unlawful agreement; a court must declare it void from the start (section 89(5)(a)), order the provider to refund the consumer (section 89(5)(b)), and the provider generally cannot recover what it advanced. The original Act also empowered a court to order the advanced money forfeited to the State, but in National Credit Regulator v Opperman [2012] ZACC 29 the Constitutional Court struck that provision (section 89(5)(c)) down as an arbitrary deprivation of property inconsistent with section 25(1) of the Constitution. Registering after the fact does not cure an agreement that was unlawful when made — this is the single most expensive mistake an informal lender can make.

What makes a credit agreement unlawful?

The NCA lists several categories of unlawful agreement in sections 89 and 90. An agreement is unlawful where, among other things, the credit provider was unregistered when registration was required (section 89), where it was made with an unemancipated minor or a person declared mentally unfit, or where it results from negative-option marketing. Section 90 separately renders specific provisions of a credit agreement unlawful — for example, clauses that waive a consumer’s statutory rights, authorise the provider to enter judgment without notice, or set the consumer’s liability to defeat the Act. An unlawful provision is generally severed or refashioned; an unlawful agreement is void and the provider generally cannot recover what it advanced (the original power to order forfeiture to the State having been struck down in National Credit Regulator v Opperman [2012] ZACC 29).

How much interest can a lender charge?

For agreements regulated by the NCA, interest is capped by the Regulations (regulation 42, Table A, as amended with effect from 6 May 2016). The caps are formulae fixed at the date credit is granted and added to the SARB repurchase rate ("RR"): mortgages RR + 12% per year, credit facilities RR + 14%, unsecured credit RR + 21%, developmental credit RR + 27%, and other credit RR + 17%; short-term credit is 5% per month on the first loan (3% per month on subsequent loans in a calendar year), and incidental credit 2% per month. There is no multiplier — the repo rate is added once. Because the cap is a formula, you must apply the repo rate current when the credit was granted rather than quoting a single hard percentage. Outside the NCA — for example a large loan to a company above the thresholds — there is no statutory rate cap, but the in duplum rule and the common law against unconscionable terms still apply.

What is the in duplum rule?

The in duplum rule is a common-law principle that stops unpaid interest running once the arrear interest has reached the amount of the outstanding capital — interest may not exceed the unpaid capital. The NCA reinforces and extends this for regulated agreements in section 103(5), which caps the total of all charges (interest, initiation and service fees, default and collection charges) that may accrue while a consumer is in default at no more than the unpaid balance of the principal debt at the date of default. In Paulsen v Slip Knot Investments 777 (Pty) Ltd [2015] ZACC 5 the Constitutional Court confirmed the common-law rule continues to operate even during litigation — interest is suspended once it equals capital — though it may resume after judgment. The rule limits what a creditor can recover, not what it may charge in the abstract.

What is reckless credit, and what is an affordability assessment?

Reckless credit is credit granted in breach of the NCA’s pre-agreement duties. Before entering most regulated agreements, a credit provider must conduct an affordability assessment under section 81 — taking reasonable steps to understand the consumer’s existing financial means, obligations and debt-repayment history, in line with the Affordability Assessment Regulations. Credit is reckless if the provider failed to do that assessment at all, or did it but granted the credit despite the consumer not understanding the risks or the agreement leaving the consumer over-indebted. Under section 83 a court that finds an agreement reckless may set it aside in whole or in part, or suspend its force, and may re-arrange the consumer’s obligations. The affordability rules do not apply to deals outside the Act, such as large agreements with large juristic persons.

What is a section 129 notice, and why does it matter?

Section 129 of the NCA requires a credit provider, before it can sue or take any other enforcement step on a regulated agreement that is in default, to first deliver a notice to the consumer. The notice must draw the default to the consumer’s attention and propose that the consumer refer the agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud to resolve the dispute or agree a plan to bring the account up to date. Read with section 130, the provider must allow at least ten business days and may not start legal proceedings before the notice period has run. The notice is a precondition to enforcement: if it is not properly delivered, a court must stay the matter. The Constitutional Court set the delivery standard in Sebola v Standard Bank [2012] ZACC 11 and refined it in Kubyana v Standard Bank [2014] ZACC 1.

What is debt review (debt counselling)?

Debt review is the NCA’s mechanism for over-indebted consumers, set out in sections 86 and 87. A consumer applies to a registered debt counsellor, who assesses whether the consumer is over-indebted — that is, unable to meet all their obligations on time. If so, the counsellor may propose a re-arrangement of the consumer’s debts (longer terms, reduced instalments, lowered rates) and refer it to a magistrate’s court or the National Consumer Tribunal to be made an order. While a consumer is under debt review, credit providers generally may not enforce the affected agreements, which gives the consumer breathing space. Debt review is only available to natural persons, applies only to NCA-regulated agreements, and ends with a clearance certificate once the re-arranged debts are paid. It is distinct from administration, sequestration and the not-yet-in-force debt-intervention reform.

What formalities must a suretyship meet to be valid?

A suretyship is valid only if it complies with section 6 of the General Law Amendment Act 50 of 1956: its terms must be embodied in a written document signed by or on behalf of the surety. Because section 6 requires the terms of the suretyship to be embodied in the signed document, the essential terms — who the creditor, surety and principal debtor are, and the nature and amount of the principal debt — must appear from the document itself; a purely oral suretyship is void. Where the surety is a natural person standing surety for a juristic-person debt, the NCA can also treat the suretyship as a credit guarantee and bring its own protections to bear. A surety who pays is generally entitled to be reimbursed by the principal debtor.

How long before a debt prescribes?

Most ordinary contractual and delictual debts prescribe — become unenforceable — after three years under section 11(d) of the Prescription Act 68 of 1969. The clock runs from the date the debt becomes due, which is generally when the creditor knows (or could reasonably know) the identity of the debtor and the facts giving rise to the debt. Some debts have longer periods: a judgment debt and a debt secured by a mortgage bond prescribe after thirty years. Prescription can be interrupted by the debtor’s acknowledgment of liability or by the service of summons, which restarts or suspends the clock. A creditor who waits too long loses the right to sue. Importantly for credit, section 126B of the NCA bars the sale or collection of a credit debt that has already prescribed, and prevents reviving prescribed credit debt by part-payment.

What is the difference between a credit facility, a credit transaction and a credit guarantee?

These are the three forms of credit agreement under section 8 of the NCA. A credit facility is a revolving arrangement where the provider supplies goods, services or money as the consumer determines from time to time, defers payment, and levies a fee, charge or interest — a credit card or store card is the classic example. A credit transaction is a discrete deal in which payment is deferred for a cost, such as an instalment-sale agreement, a mortgage, a lease, a pawn transaction, or a money loan. A credit guarantee is an undertaking to satisfy, on demand, another consumer’s obligation under a credit facility or credit transaction — for instance a suretyship for a regulated loan. The classification matters because it changes which sections of the Act apply and which disclosures and formalities attach.

Does the NCA apply to a once-off private loan between friends or family?

Probably not, for two reasons. First, the Act only applies to agreements made at arm’s length; a loan between people in a close relationship, where the terms are not negotiated as between independent parties, may fall outside the Act for that reason alone. Second, the Act only regulates "credit", which requires both a deferral of payment and a charge, fee or interest for the deferral. An interest-free, no-fee loan to a relative is not a credit agreement at all, because there is no cost of credit. But be careful: a private lender who charges interest, lends repeatedly, or lends as a business can be a credit provider who must register, and an unregistered credit agreement is void. If you regularly advance money for a return, take advice before treating the deal as informal.

Where can I get help with an NCA, lending or enforcement question?

Martin Kotze advises lenders, businesses and borrowers on NCA compliance, loan and security drafting, credit-provider registration, interest and in duplum disputes, section 129 enforcement and debt relief. If your matter touches related areas, the firm also handles notarial bonds over movable property, private mortgage bonds over fixed property, and trust structures used in lending and security. General guidance on this hub is not a substitute for advice on your facts; book a consultation to discuss your agreement or dispute.

Finance & Credit Law FAQ: The NCA, Lending & Enforcement [2026]

About this FAQ

This page collects the questions we are asked most often about South African finance and credit law — from whether the National Credit Act applies to a particular deal, through the cost-of-credit and consumer-protection rules, to enforcement and prescription. Each answer is a starting point, not legal advice on your facts. The rand figures, thresholds and interest caps below were re-verified against their gazetted sources on 26 June 2026; several of them move with the SARB repo rate, so check the underlying spoke pages and the source library before relying on a hard number.

For the full treatment of any topic, follow the links into the hub: the threshold question, what counts as a credit agreement, interest and in duplum, and the glossary of terms.

Frequently asked questions

The National Credit Act 34 of 2005 applies to almost every credit agreement made at arm’s length in South Africa — but only if the agreement actually grants credit (payment is deferred and a charge, fee or interest is levied for the deferral). Three exclusions take an otherwise-qualifying deal back out: a juristic-person consumer above the R1 000 000 threshold; a large agreement (principal debt over R250 000) with a large juristic person; and parties not at arm’s length. The test is always substance over form.
Sometimes. A juristic person (company, close corporation, or a trust with more than two trustees) is exempt if its asset value or turnover is R1 000 000 or more when the deal is made. Below that line it is treated more like a consumer — but the Act still does not reach a large agreement (principal debt over R250 000) made by a large juristic person. The two thresholds interlock, as explained in NCA thresholds for companies.
They are the two money thresholds in the Determination of Thresholds (GN 713, GG 28893, 2006), both still current. R1 000 000 is the juristic-person exemption (asset value or turnover). R250 000 is the large-agreement line under s 7(1)(b): a large agreement made by a large juristic person is excluded. Below R250 000 is the intermediate band; R15 000 and under are small agreements. See NCA thresholds for companies.
It depends on the substance, not the label. In The Profit Hub (Pty) Ltd v Zuwon Consultants (Pty) Ltd [2026] ZASCA 88 the SCA held an agreement styled as invoice “discounting” was in substance a loan, because the client had to repay the advance plus a fee whether or not its debtors paid. A true discount is a purchase of the debt; a loan is an advance to be repaid. See invoice discounting vs loans.
Almost certainly, if you grant credit agreements the Act regulates. Since 11 May 2016 the registration threshold has been nil (R0) — there is no minimum value or number of agreements below which registration is excused. The duty still turns on whether the agreement is regulated, so the threshold exclusions matter, but there is no longer a registration floor. See credit-provider registration.
The consequences are drastic. Under s 89 a credit agreement made by a provider who should be registered but is not is unlawful and void (s 89(5)(a)); the provider must refund the consumer (s 89(5)(b)) and generally cannot recover what it lent. The further power to order the money forfeited to the State (s 89(5)(c)) was struck down as unconstitutional in National Credit Regulator v Opperman [2012] ZACC 29. See unlawful and unregistered credit agreements.
The Act lists unlawful agreements in s 89 (e.g. an unregistered provider, a minor, or negative-option marketing) and unlawful provisions in s 90 (e.g. clauses that waive statutory rights or allow judgment without notice). An unlawful provision is severed or refashioned; an unlawful agreement is void and the provider generally cannot recover what it lent. See unlawful and unregistered credit agreements.
For NCA-regulated credit, interest is capped by regulation 42 (Table A, amended 6 May 2016). The caps are formulae fixed when credit is granted, added once to the SARB repo rate (RR): mortgages RR + 12% p.a., credit facilities RR + 14%, unsecured RR + 21%, developmental RR + 27%, other credit RR + 17%; short-term 5% per month (first loan) and incidental 2% per month. Quote the formula, not a hard percentage. See interest caps & the in duplum rule.
In duplum is a common-law rule that stops arrear interest once it equals the outstanding capital — interest may not exceed unpaid capital. For NCA-regulated deals, s 103(5) extends this to cap all default charges at the unpaid principal at default. In Paulsen v Slip Knot Investments 777 [2015] ZACC 5 the Constitutional Court held the rule keeps running during litigation. See interest caps & the in duplum rule.
Reckless credit is credit granted in breach of the Act’s pre-agreement duties. Under s 81 a provider must run an affordability assessment of the consumer’s means, obligations and repayment history. Credit is reckless if no assessment was done, or it was done but the consumer did not understand the risks or was left over-indebted. Under s 83 a court may set aside or suspend the agreement. See reckless credit & affordability.
Before suing on a defaulting regulated agreement, a credit provider must deliver a section 129 notice telling the consumer of the default and proposing referral to a debt counsellor, ombud or other forum. Read with s 130 it gives the consumer at least 10 business days; it is a precondition to enforcement. The delivery standard was set in Sebola v Standard Bank [2012] ZACC 11 and Kubyana [2014] ZACC 1. See debt enforcement & the section 129 notice.
Debt review (ss 86–87) is the NCA’s remedy for an over-indebted consumer. A registered debt counsellor assesses the consumer and may propose a re-arrangement of debts — longer terms, lower instalments — confirmed by a court or the Tribunal. While under review the consumer is generally protected from enforcement. It is open only to natural persons, applies only to regulated agreements, and ends with a clearance certificate. See debt enforcement.
A suretyship is valid only if it meets s 6 of the General Law Amendment Act 50 of 1956: its terms must be embodied in a written document signed by or on behalf of the surety. Because s 6 requires the terms to appear in the signed document, the essential terms — the creditor, surety, principal debtor and the nature and amount of the debt — must be ascertainable from the writing itself. An oral suretyship is void. A natural-person surety may also enjoy NCA protection as a credit guarantee. See loans, suretyships & acknowledgements of debt.
Most ordinary debts prescribe after three years under s 11(d) of the Prescription Act 68 of 1969, running from when the debt becomes due. Judgment debts and mortgage-bond debts prescribe after thirty years. The clock is interrupted by acknowledgment of liability or service of summons. For credit, s 126B of the NCA bars collecting a credit debt that has already prescribed. See the Finance & Credit Law glossary.
Section 8 recognises three forms. A credit facility is revolving credit drawn as the consumer chooses (e.g. a credit card). A credit transaction is a discrete deferred-cost deal (instalment sale, mortgage, lease, pawn, money loan). A credit guarantee is an undertaking to satisfy another consumer’s credit obligation (e.g. a suretyship for a regulated loan). Classification changes which rules apply. See credit agreements explained.
Usually not. The Act only reaches agreements at arm’s length, and only regulates credit — which needs both a deferral of payment and a charge, fee or interest. An interest-free, no-fee family loan is not a credit agreement. But a private lender who charges interest or lends repeatedly as a business can be a credit provider who must register, and an unregistered agreement is void. Take advice before treating a deal as informal.
Martin Kotze advises lenders, businesses and borrowers on NCA compliance, loan and security drafting, credit-provider registration, in duplum disputes, section 129 enforcement and debt relief. The firm also handles notarial bonds over movable property, private mortgage bonds over fixed property, and trust structures used in lending. General guidance here is not advice on your facts — book a consultation to discuss your matter.

Finance & Credit Law FAQ: The NCA, Lending & Enforcement [2026]

About this FAQ

Frequently asked questions

Sources

The Keystone Workspace

Related guides

Does the NCA Apply? Interactive Checker

Maximum Interest & In Duplum Calculator

Finance & Credit Law Glossary

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