Terms are listed alphabetically. Definitions are general guidance, not legal advice — the precise meaning of a term always depends on the statute it comes from and the facts of your matter. For the bigger picture, start with the Finance & Credit Law hub, or jump to the FAQ and the source library.
A
Acknowledgement of debt
A written admission by a debtor that they owe a stated amount, usually with agreed repayment terms. An acknowledgement of debt (or “AOD”) makes the debt far easier to prove and to enforce, and a signed AOD that includes a consent to judgment can shorten litigation considerably. See loans, suretyships & acknowledgements of debt.
Affordability assessment
The enquiry a credit provider must carry out before granting credit to a natural-person consumer, to establish whether the consumer can realistically afford the repayments. It examines the consumer’s income, existing obligations and living expenses. Failing to do it properly can make the agreement reckless. See reckless credit & affordability.
C
Cession in securitatem debiti
A cession of rights (commonly book debts) given as security for a debt, rather than an outright sale. The cedent transfers the right to the cessionary to secure repayment; once the debt is paid, the right reverts. Distinguishing this from an out-and-out sale of the debt is decisive in receivables finance — see invoice discounting vs loans.
Consumer
Under the National Credit Act, the party to whom credit is granted — the borrower, the holder of a credit facility, the buyer under an instalment sale, the mortgagor, or the guarantor under a credit guarantee. A consumer can be a natural person or, within limits, a juristic person. Whether a consumer is protected by the Act turns on the thresholds.
Credit agreement
The umbrella term for an agreement the National Credit Act regulates. The Act recognises three families: a credit facility, a credit transaction and a credit guarantee (or a combination). At its core a credit agreement defers payment or advances money and charges a fee, interest or both for doing so. See credit agreements explained and when the NCA applies.
Credit facility
A credit agreement under which the provider supplies goods, services or money as and when the consumer asks (think credit card, store card or overdraft), defers the consumer’s obligation to pay, and charges a fee or interest for the deferral. Its hallmark is the consumer’s revolving discretion to draw “from time to time”. See credit agreements explained.
Credit guarantee
An agreement in which a person promises to satisfy, on demand, another consumer’s obligation under a credit facility or credit transaction. A suretyship for a credit agreement is the everyday example. Because the NCA brings credit guarantees within its scope, the protections that attach to the underlying agreement can reach the guarantor too. See credit agreements explained.
Credit provider
The party who supplies the credit — the lender, the seller under an instalment sale, the facility-issuer, or the mortgagee. Every credit provider that is party to a credit agreement to which the Act applies must register with the National Credit Regulator (the threshold for registration is now nil). See credit provider registration.
Credit transaction
A once-off credit agreement that is not a facility — for example a term loan, an instalment sale, a lease, a mortgage agreement, a pawn transaction, a discount transaction, or an incidental credit agreement. Unlike a facility there is no revolving draw-down; the amount and terms are fixed at the outset. See credit agreements explained.
D
Debt review (debt counselling)
The National Credit Act’s formal over-indebtedness mechanism. An over-indebted consumer applies to a registered debt counsellor, who assesses the position and may propose a re-arrangement of the consumer’s obligations for confirmation by a tribunal or court. While under review the consumer is protected from enforcement on the reviewed agreements. See debt enforcement.
Default
The consumer’s failure to meet an obligation under a credit agreement — typically a missed or short payment. Default is what triggers the credit provider’s enforcement steps, beginning (for NCA agreements) with a section 129 notice. See debt enforcement & the section 129 notice.
Discounting
Buying a debt for less than its face value so as to advance cash against it. In a true discount the financier purchases the debt, becomes its owner and carries the risk that the debt may not be collected — it is a sale, not a loan. Where the client must repay the advance regardless of whether the debtor pays, courts recharacterise the deal as a loan. See invoice discounting vs loans.
F
Factoring
A form of receivables finance in which a business sells or assigns its book debts (invoices) to a factor in exchange for immediate cash, usually for a fee. Whether a particular factoring deal is a true sale of the debts or a disguised secured loan depends on its substance, not its label. See invoice discounting vs loans.
I
In duplum rule
The rule that arrear interest stops accruing once it equals the amount of the unpaid capital — so the interest can never, at any moment, exceed the outstanding principal. The National Credit Act extends a statutory version of the rule to all charges on a credit agreement in default. See interest & the in duplum rule.
In writing (suretyship — section 6)
A formality requirement, not a figure: under section 6 of the General Law Amendment Act a suretyship is invalid unless the terms of the suretyship are embodied in a written document signed by or on behalf of the surety. An oral or unsigned suretyship is void. See loans, suretyships & acknowledgements of debt.
Incidental credit agreement
Not a loan as such, but an account for goods or services where a fee or interest is charged because an amount remains unpaid after an agreed date (for example a late-paid professional or utility account). The NCA treats it as a credit agreement, but with limited application. See credit agreements explained.
Intermediate credit agreement
The NCA’s middle size band. For most agreements an intermediate agreement is one above the R15 000 small-agreement ceiling but at or below the R250 000 large-agreement line. Classification affects required disclosures and formalities. See credit agreements explained.
J
Juristic person
A company, close corporation, trust (with more than two trustees), partnership or other legal entity — as opposed to a natural person. A juristic person whose asset value or annual turnover equals or exceeds the R1 000 000 threshold falls outside the National Credit Act, and even below the threshold a juristic-person consumer does not get the Act’s reckless-credit protections. See NCA thresholds for juristic persons.
L
Large credit agreement
A credit agreement whose principal debt exceeds R250 000, or a mortgage agreement of any size. Large agreements carry the fullest disclosure and quotation requirements, and the large-agreement line is also the level at which several NCA exclusions for juristic persons bite. See credit agreements explained and the thresholds.
Loan
An advance of money that the borrower must repay, usually with interest, with the lender looking to the borrower (and any security) for repayment. The defining feature, as against a discount, is that the risk of non-payment stays with the borrower. A loan is frequently a credit agreement under the NCA. See loans and invoice discounting vs loans.
N
National Credit Act (NCA)
The Act (34 of 2005) that regulates consumer credit in South Africa — it governs which agreements are credit agreements, sets cost-of-credit limits, requires credit-provider registration, imposes affordability and disclosure duties, prohibits reckless credit, and prescribes enforcement steps. See when the National Credit Act applies.
National Credit Regulator (NCR)
The statutory regulator that registers credit providers, credit bureaux and debt counsellors, monitors the credit market, and enforces compliance with the NCA. Credit providers register with, and report to, the NCR. See credit provider registration & the NCR.
Notarial bond
A bond registered before a notary public over a debtor’s movable property as security for a debt. A general notarial bond covers all the debtor’s movables; a special notarial bond covers specified, identifiable movables and (once registered) ranks as a secured claim. See our practical guide to notarial bonds.
P
Prescribed rate of interest
The default statutory interest rate that applies to a debt where no rate is agreed — for example on a judgment debt or an unliquidated claim. From 1 March 2026 the prescribed rate is 10.25% per annum. Contractual interest, where validly agreed, applies instead of the prescribed rate. See interest & the in duplum rule.
Prescription
The extinction of a debt by the passage of time under the Prescription Act. Most ordinary contractual debts prescribe after three years (longer periods apply to mortgage bonds, judgment debts and certain other claims). The running of prescription can be interrupted, for example by the debtor’s acknowledgement of liability or by service of summons. See our FAQ for common questions.
Principal debt
The core amount owing under a credit agreement before the addition of interest, fees and charges — broadly, the deferred amount or the amount advanced. The size of the principal debt determines the agreement’s classification, including whether it crosses the R250 000 large-agreement line. See credit agreements explained.
Private bond
A mortgage or loan arrangement between private parties (rather than a bank), often used in family or investment lending. Even a private lender who advances money at interest may be a credit provider that has to register, depending on the agreement. See our guide to private bonds and to credit provider registration.
R
Reckless credit
Credit extended to a natural-person consumer without a proper affordability assessment, or where the assessment showed the consumer did not understand the risks or would become over-indebted. A court can set aside or suspend a reckless credit agreement, and may even extinguish the consumer’s rights and obligations under it. See reckless credit & affordability.
Repurchase (repo) rate
The benchmark interest rate at which the South African Reserve Bank lends to commercial banks. It is the reference point from which many market rates (and the prime lending rate) move, and changes in the repo rate flow through to the prescribed rate of interest and to NCA maximum-rate calculations. See interest & the in duplum rule.
S
Section 129 notice
The mandatory written notice a credit provider must deliver to a defaulting consumer before enforcing an NCA credit agreement through litigation. It draws the default to the consumer’s attention and proposes referral to a debt counsellor or other resolution. Suing without a valid section 129 notice usually means the claim cannot proceed. See debt enforcement & the section 129 notice.
Service fee
A recurring fee a credit provider may charge for the routine administration of a credit agreement, capped by regulation. The monthly service-fee maximum is R60. It is one of several cost-of-credit charges the NCA limits, alongside interest, the initiation fee, credit insurance and default-administration charges. See interest & the in duplum rule.
Small credit agreement
The NCA’s smallest size band — generally a credit agreement at or below the R15 000 ceiling (and certain pawn transactions). Small agreements have lighter, plain-language disclosure requirements than intermediate or large agreements. See credit agreements explained.
Suretyship
An accessory undertaking by a surety to be liable for another person’s debt if that person defaults. Because it is accessory, the surety’s liability follows the principal debt — if the principal debt is invalid, so is the suretyship. It must be in writing and signed by or on behalf of the surety to be valid (section 6). See loans, suretyships & acknowledgements of debt.
T
Threshold (NCA)
A monetary line that decides whether, or how, the National Credit Act applies. The key current thresholds are: the R1 000 000 juristic-person threshold (above it a company is outside the Act), the R250 000 large-agreement line, the R15 000 small-agreement ceiling, and the nil threshold for credit-provider registration. See NCA thresholds for juristic persons.
U
Unlawful credit agreement
A credit agreement the NCA declares unlawful — for example one concluded by an unregistered credit provider, or one resulting from negative-option marketing or unsolicited credit. An unlawful agreement is void, and a court may order the credit provider to forfeit its right to recover money advanced. See unlawful & unregistered credit agreements.
Unregistered credit provider
A credit provider that has failed to register with the National Credit Regulator despite being required to. Because the registration threshold is now nil, any credit provider party to a regulated credit agreement must register; an agreement made while unregistered is unlawful. See credit provider registration and unlawful agreements.
Where to next
Browse the full Finance & Credit Law hub, check the FAQ, or verify any authority in the source library. If you need advice on a specific credit, loan or security arrangement, you can book a consultation with an attorney. For related security work, see notarial bonds, private bonds and trusts.