National Credit Act, 2005 (Act No. 34 of 2005)Chapter 5 : Consumer Credit AgreementsPart C : Consumer’s liability, interest, charges and fees101. Cost of credit |
| (1) | A credit agreement must not require payment by the consumer of any money or other consideration, except— |
| (a) | the principal debt, being the amount deferred in terms of the agreement, plus the value of any item contemplated in section 102; |
| (b) | an initiation fee, which— |
| (i) | may not exceed the prescribed amount relative to the principal debt; and |
| (ii) | must not be applied unless the application results in the establishment of a credit agreement with that consumer; |
| (c) | a service fee, which— |
| (i) | in the case of a credit facility, may be payable monthly, annually, on a per transaction basis or on a combination of periodic and transaction basis; or |
| (ii) | in any other case, may be payable monthly or annually; and |
| (iii) | must not exceed the prescribed amount relative to the principal debt; |
| (d) | interest, which— |
| (i) | must be expressed in percentage terms as an annual rate calculated in the prescribed manner; and |
| (ii) | must not exceed the applicable maximum prescribed rate determined in terms of section 105; |
| (e) | cost of any credit insurance provided in accordance with section 106; |
| (f) | default administration charges, which— |
| (i) | may not exceed the prescribed maximum for the category of credit agreement concerned; and |
| (ii) | may be imposed only if the consumer has defaulted on a payment obligation under the credit agreement, and only to the extent permitted by Part C of Chapter 6; and |
| (g) | collection costs, which may not exceed the prescribed maximum for the category of credit agreement concerned and may be imposed only to the extent permitted by Part C of Chapter 6. |
| (2) | A credit provider who is a party to a credit agreement with a consumer and enters into a new credit agreement with the same consumer that replaces the earlier agreement in whole or in part may charge that consumer an initiation fee contemplated in subsection (1)(b) in respect of that second credit agreement, only to the extent permitted by regulation, having regard to the nature of the transaction and the character of the relationship between the credit provider and consumer. |
| (3) | If a credit facility is attached to a financial services account, or is maintained in association with such an account, any service charge in terms of that account— |
| (a) | if that charge would not have been levied if there were no credit facility attached to the account, is subject to the prescribed maximum contemplated in subsection (1)(c); and |
| (b) | otherwise, is exempt from the prescribed maximum contemplated in subsection (1)(c). |