What Is the Total Cost of Credit?
When you borrow money in South Africa, you pay more than just the amount borrowed. The total cost of credit includes principal, interest, initiation fee, and monthly service fees. Under the National Credit Act (NCA), every registered lender must disclose this total before you sign anything.
The Three Components Every Borrower Should Know
Interest
Calculated on your outstanding balance. Fido charges 5% per month on a first loan (3% on subsequent loans). On R6,000 over 3 months: R900 in interest.
Initiation Fee
A once-off fee regulated under NCA Regulation 42. R165 for the first R1,000, then 10% of the remainder up to R1,050 maximum. On R6,000: R665.
Monthly Service Fee
A flat monthly admin fee capped at R69/month. Over 3 months: R207.
A Real Example: R6,000 Over 3 Months
Total repayment: R6,000 + R900 (interest) + R665 (initiation) + R207 (service) = R7,772. Monthly instalment: R2,591.
Fido shows you every line of this calculation before you accept. The number you see is the number collected on repayment day.
What the NCA Requires Lenders to Show You
Section 92 of the NCA requires a pre-agreement statement and quotation before any credit agreement. This must state the total cost in rand. Any lender who won't show you the total upfront is not compliant. File a complaint with the National Credit Regulator.
Red Flags to Watch For
- Only quoting a monthly repayment, not the total
- Fees revealed after you apply
- No pre-agreement quotation before signing
- Admin or processing fees not included in the quoted rate
- No NCR registration
Conclusion
The NCA gives you the right to the full cost in rand before you sign. Exercise it every time. Fido shows it automatically, upfront, no prompting required.
Yes. Fido amortises all fees into equal monthly instalments. One number, every month, no surprises.
No. Section 101 is exhaustive. Any unlisted charge is illegal. Report it to the NCR.
The NCR maintains a public register at ncr.org.za. Fido is registered as NCRCP.
