This page is written for the person doing the lending rather than the borrowing. Lending money in South Africa — whether to a friend, an employee or as a business — is regulated, and lending as a business without registering is an offence.
The rules are more restrictive than most people realise, and the consequences of ignoring them include an agreement a court will not enforce.
Eligibility Requirements at a Glance
What is required to lend money lawfully.
- Registration as a credit provider with the National Credit Regulator, where the National Credit Act applies to your lending
- Compliance with the Act’s interest rate and fee caps, which are prescribed in regulation
- A compliant written credit agreement containing the prescribed terms
- An affordability assessment conducted before granting credit
- Prescribed pre-agreement disclosure and a quotation
- Compliance with debt collection and enforcement procedures
- Compliance with the Protection of Personal Information Act 4 of 2013 for borrower information
- Registration and reporting obligations that follow registration
Income and Affordability Requirements
Registration is not optional above the threshold. The National Credit Act requires a person who carries on the business of a credit provider to register with the NCR, and the Act sets out when registration is required. Confirm your position with the National Credit Regulator directly, because the thresholds and the categories are prescribed and revised.
An unregistered credit provider’s agreement is unlawful. Where the Act requires registration and a lender has not registered, the credit agreement is unlawful and a court must declare it void — which can mean losing both the interest and the capital. This is the single most important point on this page.
Interest and fees are capped. The Act prescribes maximum initiation fees, monthly service fees and interest rates by credit type. Charging above those caps is unlawful regardless of what the borrower agreed to, and the caps are set in regulation and revised.
The affordability assessment is compulsory. Lending without assessing whether the borrower can afford the repayment is reckless lending, and a court can suspend or set aside the agreement.
Some lending falls outside the Act — certain incidental credit, some loans between family members, and credit to juristic persons above the prescribed thresholds. The exclusions are specific, and assuming one applies without checking is how lenders get into trouble.
Credit and Financial Requirements
Lending to friends and family is where the informal cases arise. A genuine once-off loan between individuals, not in the course of business, generally falls outside the Act. Repeated lending at interest starts to look like carrying on business, and the line is not a matter of opinion — confirm it with the NCR.
Put it in writing even when the law does not require it. A short written acknowledgment recording the amount, the repayment terms and the date protects both sides and prevents the disagreement that ends the relationship. Money lent without a record is very often not recovered.
Prescription applies. Under the Prescription Act 68 of 1969, a debt generally prescribes after three years, after which it cannot be enforced. Acknowledgment of the debt by the borrower interrupts prescription. A loan left unaddressed for years may simply become unrecoverable.
Employer loans and salary advances have their own considerations under the Basic Conditions of Employment Act 75 of 1997, which limits deductions from remuneration. Deducting a loan repayment from wages requires the employee’s written agreement and is subject to those limits.
Collection is regulated. Debt collectors must be registered with the Council for Debt Collectors, and prescribed procedures apply to enforcement. Harassment, threats and unlawful collection practices are offences.
Never take an ID book, bank card or SASSA card as security. Retaining a borrower’s identity document, card or PIN is unlawful and is a practice associated with predatory lending. It is also a criminal matter.
Documents and Verification Required
What a lender should hold and record.
- A written agreement recording the amount, repayment terms, interest and dates
- The borrower’s identifying details, held in compliance with POPIA
- Records of the affordability assessment, where the Act applies
- The pre-agreement quotation issued to the borrower
- Proof of payment of the advance
- A record of every repayment received
- NCR registration documents and the certificate, where registered
- Written consent for any deduction from remuneration, for employer loans
How to Apply and Improve Approval Readiness
If you intend to lend as a business, start with the National Credit Regulator: establish whether registration is required, what category applies, and what the ongoing obligations are. Registration brings reporting requirements and conduct standards, and operating without it puts the capital at risk.
If you are lending informally to someone you know, write it down, keep it modest, and accept that recovery through the courts is slow and costly. Lend only what you can afford not to see again — that is not cynicism, it is the honest position.
- Confirm with the NCR whether registration is required for your lending
- Understand that an unregistered provider’s agreement can be declared void
- Never charge above the prescribed interest and fee caps
- Conduct and record an affordability assessment where the Act applies
- Put every loan in writing, including informal ones
- Note that debts generally prescribe after three years
- Get written consent for any deduction from an employee’s wages
- Never retain an ID document, bank card or PIN as security
- Use registered debt collectors and lawful collection procedures
Frequently Asked Questions
Do I need to register to lend money?
If you carry on the business of a credit provider as the National Credit Act defines it, yes. Confirm your position with the National Credit Regulator — the thresholds are prescribed.
What happens if I lend without registering?
Where registration was required, the credit agreement is unlawful and a court must declare it void, which can mean losing the interest and the capital.
Can I lend to a friend?
A genuine once-off loan between individuals, not in the course of business, generally falls outside the Act. Repeated lending at interest starts to look like carrying on business.
How long do I have to recover a loan?
A debt generally prescribes after three years under the Prescription Act, after which it cannot be enforced. Acknowledgment by the borrower interrupts prescription.
Registration thresholds, interest and fee caps, and collection rules are set in the National Credit Act and its regulations and are revised. Confirm current requirements with the National Credit Regulator, and take legal advice on your specific position.