A friend took out a small loan, R8000 over 6 months…. 50% interest on that!
I can see why they are thriving!
I can bet you that their system applies the correct interest and applicable fees according to the loan product and timeframe. They will not fsck around with that. Capitec generates most of its profits from account and transaction fees anyway. And not from credit agreements.
These are the interest rates and fees as set out by the NCA. Also here is a
Wikipedia link that outlines the NCA.
Short-term credit agreements are classified as agreements with a payback timeframe of 1-6 months with a max loan amount of R8000. Above that you are looking at unsecured credit agreements that attract different interest rates.
Interest rates applied to short-term credit agreements are 5% per month for the first agreement in a calendar year and 3% per month for the subsequent following loans.
The service fee is a maximum of R60pm.
The initiation fee is R165 per credit agreement + 10% of the amount over R1000.00 but may never exceed R1050.00 in total.
All of this is applied pro-rata as well and that is why you can never really give a fixed payback amount to a client.
Then there is VAT applied to the service fee and initiation fee.
The credit provider may charge less service and initiation fees if he wants to. But as you can see the interest rates on short-term credit agreements are a joke. So if you want to make money you have to use the fees that are allowed to make up the difference.
