South Africa short-term and unsecured loan decision template

Build and run an automated credit decision in lending software for an online or app loan to a South African consumer. Each stage shows the rule it rests on, and numeric rules are decision table cells to copy into the decision.

Stages of the credit decision

The stages run in this order inside one decision. Each outcome keeps its reason.

Stage	Checks	Source
Eligibility	Checks that the lender is registered as a credit provider, sets the product type from amount and term, and records the consumer’s POPIA s.18 notice. Short-term credit is at most R8,000 over six months.	NCA s.40; Reg 39; POPIA s.18
Identity	The lender checks the South African ID against the Department of Home Affairs population register, runs fraud, due diligence, sanctions, device and duplicate checks, and holds no ID document, bank card or PIN.	FIC Act s.21; NCA s.90(2)(l), s.133
Credit risk	Checks a bureau report no older than seven business days at approval and declines debt review, adverse listings or judgments, except that consolidation loans go to a person.	NCA s.80, s.81, s.88; Reg 23A(13)
Affordability	Uses the latest three payslips or three months of bank statements, excludes child support and foster care grants, applies the Table 1 norm by band, deducts bureau instalments and maintenance, and checks the new instalment fits.	Reg 23A(4) to (12)
Exposure	Checks the interest rate, initiation fee, monthly service fee and credit life premium against the caps, with short-term rates capped at 5% monthly on the first loan that calendar year and 3% on later loans.	Reg 42; Reg 44; Credit Life Insurance Regulations 2017
Vulnerability	Checks that the consumer understands the risks, costs and obligations, records debts replaced by a consolidation loan, and keeps the consumer’s chosen language for every document.	NCA s.81(2)(a)(i), s.63; Reg 23A(14)
Outcome	Sets approve, decline or refer, records the dominant reason and bureau name if a bureau report drives decline, allows representations to a person, and holds a total-cost and credit-multiple quotation for five business days.	NCA s.62, s.92; POPIA s.71; Reg 23A(15)
Record	Keeps inputs, documents, expense norm calculation, bureau reference, reasons and quotation for three years, and reports the account to credit bureaus.	Reg 56; Reg 19; POPIA s.72

Decision table rules

Each table copies as cells for a decision table, with one column per attribute. The attribute paths are examples to rename for your own data.

Credit type by amount and term

Sets short-term credit for loans up to R8,000 over at most six months, and unsecured credit for anything larger or longer.

`application.amount` Condition	`application.term_months` Condition	`product.credit_type` Result
`(0,8000]`	`[1,6]`	`short_term`
`*`	`*`	`unsecured`

Bureau report age

Requests a new bureau report when the report on file is more than seven business days old.

`bureau.report_age_business_days` Condition	`bureau.pull_again` Result
`>7`	`true`
`*`	`false`

Debt review, listings and judgments

Declines for debt review, an adverse listing or a judgment, refers a consolidation loan to a person, names the bureau if its report drives the reason, and uses the first matching row from top to bottom.

`bureau.debt_review` Condition	`application.purpose` Condition	`bureau.adverse_listing` Condition	`bureau.judgment` Condition	`decision.outcome` Result	`decision.reason` Result	`decision.reason_from_bureau` Result
`=true`	`=consolidation`	`*`	`*`	`refer`	`consolidation_under_debt_review`	`true`
`=true`	`*`	`*`	`*`	`decline`	`debt_review`	`true`
`*`	`=consolidation`	`=true`	`*`	`refer`	`consolidation_with_adverse_listing`	`true`
`*`	`*`	`=true`	`*`	`decline`	`adverse_listing`	`true`
`*`	`=consolidation`	`*`	`=true`	`refer`	`consolidation_with_judgment`	`true`
`*`	`*`	`*`	`=true`	`decline`	`judgment`	`true`
`*`	`*`	`*`	`*`	`continue`		`false`

Income counted in the assessment

Marks each income line as counted or left out of gross income, excluding child support and foster care grants.

`income.source` Condition	`income.counted` Result
`=child_support_grant`	`false`
`=foster_child_grant`	`false`
`*`	`true`

Table 1 expense norms

Gives the fixed amount, factor and band minimum from Table 1 of Reg 23A, with the norm calculated as the fixed amount plus the factor multiplied by gross income above the band minimum.

`affordability.gross_income` Condition	`norm.fixed` Result	`norm.factor` Result	`norm.band_min` Result
`[0,800]`	`0`	`1`	`0`
`(800,6250]`	`800`	`0.0675`	`800`
`(6250,25000]`	`1167.88`	`0.09`	`6250`
`(25000,50000]`	`2855.38`	`0.082`	`25000`
`>50000`	`4905.38`	`0.0675`	`50000`

Affordability result

Declines when discretionary income less the new instalment is below zero, with affordability as the reason.

`affordability.surplus` Condition	`decision.outcome` Result	`decision.reason` Result
`<0`	`decline`	`affordability`
`*`	`continue`

Pricing caps by credit type

Sets the maximum rate, initiation fee, monthly service fee and credit life premium by credit type, including the rate caps for short-term and unsecured credit.

`product.credit_type` Condition	`customer.short_term_loans_this_year` Condition	`cap.rate_basis` Result	`cap.rate` Result	`cap.fee_base` Result	`cap.fee_above` Result	`cap.fee_max` Result	`cap.service_fee` Result	`cap.credit_life_per_1000` Result
`=short_term`	`=0`	`per_month`	`5`	`165`	`1000`	`1050`	`60`	`4.5`
`=short_term`	`>=1`	`per_month`	`3`	`165`	`1000`	`1050`	`60`	`4.5`
`=unsecured`	`*`	`repo_plus_per_year`	`21`	`165`	`1000`	`1050`	`60`	`4.5`

Using the template

This template reads the National Credit Act, its regulations, FICA and POPIA for building one decision. The lender’s legal team should check it against the current text before use.

Identity checks, the quotation and records sit around the decision as parts of the lender’s process. The tables cover the rules applied by the decision itself.

Use the NCA affordability calculator for one consumer’s expense norms, read the article on building the same calculation as a decision, and see the payroll or developmental loan template.

See the store credit decision template.

NCA credit types

Each page below gives one credit type’s definition under the National Credit Regulations, its caps and the caps as decision table cells.

Questions we get asked

What counts as short-term credit under the NCA?

Short-term credit is at most R8,000, repaid within six months. Anything larger or longer is an unsecured credit transaction.

Can a consumer under debt review get a loan?

Under s.88(1), a consumer under debt review takes no further credit except a consolidation agreement. The NCR treats credit to a consumer under debt review as reckless, other than a consolidation loan.

Do child support and foster care grants count as income?

The National Consumer Tribunal ruled that child support and foster care grants cannot count as income for a credit application. They are left out of the affordability assessment.

What must a lender tell a consumer when declining an application?

Under s.62, the consumer can request the dominant reason in writing and the bureau’s name if its report drove the decline. POPIA s.71 requires a way to make representations and enough information about the logic.