A
Affordability Check: A process lenders use to see if you can afford the loan repayments based on your income and expenses.
Amortization: How a loan is gradually paid off over time through regular payments that include both interest and capital.
APR (Annual Percentage Rate): The total yearly cost of a loan, including interest and fees, shown as a percentage.
B
Bad Credit: When your credit history shows missed payments or defaults, making it harder to qualify for new loans.
Balloon Payment: A large, final payment that clears the remaining balance of a loan after smaller monthly payments.
C
Collateral: Something valuable (like a car or house) you offer as security to get a loan. If you don’t repay, the lender can take it.
Consolidation Loan: A loan that combines multiple debts into one with a single monthly payment — often to reduce interest or simplify budgeting.
Credit Score: A number between 0–999 that shows how reliably you’ve managed credit. Higher scores improve your chances of approval.
Credit Provider: A company (bank, lender, or platform) that legally offers loans or credit to consumers. Must be registered in South Africa.
D
Debt Review: A legal process where a debt counsellor helps you restructure your debt to make it more manageable and avoid blacklisting.
Default: When you fail to repay a loan as agreed. It damages your credit score and may lead to legal action.
E
Early Settlement: Paying off your loan before the agreed term ends. Some lenders allow this without penalty, while others may charge fees.
F
Fixed Interest Rate: An interest rate that stays the same throughout your loan term — no surprises in your monthly repayment amount.
G
Guarantor: A person who agrees to repay your loan if you can’t. Helps borrowers with low credit scores qualify for loans.
H
Hard Credit Check: A full check of your credit record that may slightly lower your score. Usually done by lenders before final approval.
I
Interest Rate: The percentage you pay a lender on top of the loan amount. Regulated under the National Credit Act.
Initiation Fee: A once-off admin fee charged by lenders when your loan is approved. Capped based on loan amount.
J
Judgment Debt: A court order confirming that you owe money. Appears on your credit record and affects future loan eligibility.
K
Know Your Customer (KYC): A legal process that verifies your identity before approving a loan. Required under POPIA and FICA.
L
Loan Term: The period over which you agree to repay your loan — like 6 months or 5 years.
Loan Agreement: The legal contract between you and the lender, outlining repayment terms, fees, and interest.
M
Microloan: A small loan (typically under R8,000) with a short term, regulated under the NCA.
Monthly Service Fee: A regulated monthly admin fee that lenders charge to maintain the loan.
N
National Credit Act (NCA): A South African law that protects borrowers by regulating loan terms and interest rates.
National Credit Regulator (NCR): The authority that registers and monitors credit providers in South Africa.
O
Over-indebted: When your expenses are higher than your income, making it hard to repay your debts.
P
POPIA: South Africa’s Protection of Personal Information Act, which ensures your personal data is handled safely.
Payday Loan: A short-term loan designed to cover expenses until your next salary is paid.
Q
Qualifying Criteria: The basic requirements you need to meet to get a loan, like age, income, and credit history.
R
Registered Credit Provider: A lender that is officially listed with the NCR and legally allowed to offer credit.
Repayment Plan: The schedule and method you’ll use to repay your loan.
S
Secured Loan: A loan backed by collateral such as a car or property.
Soft Credit Check: A light credit check that doesn’t affect your credit score, often used for pre-approval.
T
Total Cost of Credit (TCC): The full amount you’ll repay, including capital, interest, fees, and insurance.
U
Unsecured Loan: A loan that does not require any assets as collateral.
V
Variable Interest Rate: An interest rate that can go up or down based on market conditions or central bank rates.
W
Withholding of Funds: A delay in releasing funds due to incomplete documents or pending verification.
Y
Youth Loans: Loan products tailored to young South Africans, often with lighter credit requirements.
Z
Zero-Based Budgeting: A budgeting strategy where every rand is assigned a purpose, helping manage loan repayments better.
