The National Credit Act: what it means if you give credit or lend money
At a glance
What it is: A law regulating how credit is granted, used and enforced in South Africa
Who must register: Businesses that provide credit must register as a credit provider with the NCR
What it requires: Affordability checks, full disclosure, and limits on fees and interest
Enforcement: Protects over-indebted consumers and controls how you may collect
The cost of ignoring: A credit agreement may be unenforceable, plus fines and reputational damage
What it is
If you let customers pay you over time, you are granting credit — and the National Credit Act applies. It covers everything from a retail store account to a loan, and it sets the rules on affordability, disclosure, interest and how you may recover what you are owed. Getting it wrong can make the whole agreement unenforceable.
The important point: registering as a credit provider is not optional if you lend money as part of business. Unregistered credit agreements can be void, so you may lose the right to collect at all.
Who this affects
Retailers offering accounts
Store credit and instalment sales count as credit agreements. You must assess affordability and disclose the true cost before the customer signs.
Anyone who lends money
Business lending, microloans and informal loans made as a business activity can all fall under the Act. "It is just between friends" stops being true once it is a business.
Questions to ask first
Do I need to register as a credit provider for the way I sell or lend?
Do I do an affordability assessment before granting credit?
Are my interest, fees and total cost disclosed in the form the Act requires?
How do I handle a customer under debt review?
Are my collection practices lawful and respectful?
How to offer credit lawfully
1. Confirm whether you must register as a credit provider, and register if so.
2. Do an affordability assessment before granting credit.
3. Disclose interest, fees and the total cost in the required form.
4. Handle debt-review customers correctly, and stop collecting where required.
5. Keep your collection practices lawful, and your records complete.
Common mistakes
Lending without registering, and losing the ability to enforce the agreement.
Skipping the affordability assessment because "it slows the sale".
Charging fees or interest above the allowed limits.
Ignoring a debt-review notice and continuing to collect.
Related
Sources
National Credit Act, 34 of 2005
National Credit Regulator guidance
Offering credit to customers?
We can check whether you must register, and whether your agreements and affordability steps are compliant.
