How the loan fee and true cost checker works
Last updated 10 November 2026
A loan is easier to judge as a yearly percentage. This checker takes the amount you receive after fees, and what you repay, and works out the rate that connects them.
How it works
- Amount received = amount borrowed minus the fees taken off at the start.
- The calculator finds the rate for each payment period at which your repayments exactly repay the amount you received.
- The yearly rate compounds that period rate over a year.
Worked example
With the starting figures:
- You receive R 850.00 and repay R 1 200.00, so borrowing costs R 350.00.
- That is about 6 168.3% a year.
How to read your result
The headline is the true yearly cost of the loan. It is the rate that makes your repayments exactly repay the amount you actually received. Below it, the calculator shows the amount received, the total you repay, the extra you pay for borrowing and the cost for each payment period. With the starting figures, you receive R 850.00 and repay R 1 200.00, so borrowing costs R 350.00.
The cost for each payment period is the rate for one payment, whether that is a month, two weeks or a week. The yearly figure compounds it over a year. For a loan repaid in a few weeks, a modest fee becomes a very large yearly figure. That does not mean you pay that much over the loan. It means the same fee, repeated all year, would add up to that.
What to put in each box
- Loan amount: the amount on the agreement, before anything is taken off.
- Fees taken off at the start: initiation fees, admin fees or anything else deducted before the money reaches you.
- You repay each time: the whole instalment, including any monthly service fee and insurance that is charged with it.
- Number of payments and how often: a loan repaid in one go next month is one payment, paid monthly.
Comparing two loans
The yearly figure is useful because it puts different loans on the same footing. A short loan with a flat fee and a long loan with a low interest rate are hard to compare by looking at the rand amounts. Run each one through the checker with every charge counted and compare the yearly figures. Also compare the total repaid and the length of the loan, because a lower rate over a longer time can still cost more in rands.
What this does not cover
The checker only knows the numbers you enter. It does not know about late fees, penalty interest or a rate that changes during the loan. Credit providers must follow the National Credit Act, and the checker cannot say whether a particular loan or fee is allowed. The interest rate limit checker looks at the maximum rate for different types of credit.
Things to watch
- Compare loans on the same basis, with every fee counted.
- If you are struggling with debt, speak to a registered debt counsellor.
Help is available from the National Credit Regulator. Read the full disclaimer.
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