Affordability · Guide
How an affordability assessment works in South Africa
An affordability assessment is the check a lender must run, by law, before it can approve your loan. It works out whether you can realistically repay the new instalment on top of your existing costs. The rules sit in the National Credit Act and Regulation 23A, and the duty falls on the lender, not you. This guide walks through the exact mechanics: how your income, deductions, living expenses and existing debt are weighed, and what happens if a lender ignores the check.
What an affordability assessment actually is
It is the check a lender must do, by law, to confirm you can repay a loan before it lends you the money. The duty sits with the lender, not with you.
The National Credit Act says a lender may not enter into a credit agreement without first taking reasonable steps to assess three things: whether you understand the risks and costs of the credit, your debt-repayment history, and your existing financial means and obligations. The detailed method for that assessment was added to the regulations in 2015, as Regulation 23A.
So the assessment is not a hurdle the lender puts in your way. It is a legal duty the lender carries. A registered lender cannot lawfully skip it.
Your part is smaller but important. When you apply, you must answer the lender's questions fully and truthfully. If you leave out a debt or overstate your income, the lender has a defence and the protections below may not apply to you.
This post goes deep on the calculation itself. For the wider picture of everything a lender looks at when you apply, see personal loan eligibility in South Africa.
How the calculation works
The lender works out your discretionary income, which is what remains after tax, other statutory deductions, your minimum living expenses and your existing debt repayments. The new instalment has to fit inside that.
Regulation 23A sets out a clear order for the sum. A lender works down your income like this:
- Gross income. All the income you earn, from any source, before anything is taken off.
- Minus statutory deductions. Income tax, UIF, and any maintenance you are ordered to pay.
- Minus your minimum living expenses. Everyday costs like food, transport and utilities, estimated using the norms table in the next section. These figures cover living costs only, not your debt.
- Minus your existing monthly debt repayments. The lender pulls your credit-bureau record and counts what you already pay each month on other credit agreements.
What is left is your discretionary income, the money available to fund a new instalment. The estimated repayment on the loan you want must sit comfortably inside that amount. If it does not, the lender should not approve the loan.
The bureau check has to be recent. The regulation requires the lender to pull your repayment history within seven business days before it approves the credit. That is why an old statement of your debts is not enough. The lender is reading your obligations as they stand right now.
The discretionary-income idea is the heart of how much you can borrow. We unpack it further, alongside debt-to-income ratios, in discretionary income and debt-to-income ratio.
The minimum living-expense norms
Regulation 23A sets minimum monthly living-expense figures by income band, so a lender does not underestimate your everyday costs. Each band has a fixed amount plus a percentage of the income you earn above the band minimum.
A lender cannot simply take your word that you live on very little. The regulation prescribes a minimum it must assume you spend on living expenses, based on your income band.
| Gross monthly income | Minimum fixed amount | Plus % of income above the band minimum |
|---|---|---|
| R0 – R800 | R0 | 100% |
| R800,01 – R6 250 | R800 | 6,75% |
| R6 250,01 – R25 000 | R1 167,88 | 9,00% |
| R25 000,01 – R50 000 | R2 855,38 | 8,20% |
| R50 000,01 and above | R4 905,38 | 6,75% |
Here is how it reads in practice. Say your gross income is R15 000 a month. That falls in the third band, so your assumed minimum living expenses are R1 167,88 plus 9,00% of the R8 750 you earn above R6 250. That is R1 167,88 + R787,50, which comes to about R1 955 a month.
Treat that as an illustration of the method, not a budget for your own life. Your real living costs may be higher, and the lender then works from the higher, more realistic figure.
There is one narrow exception. A lender may, on an exceptional basis and only where it is justified, accept lower living expenses that you declare, but only if you complete the prescribed questionnaire. The table is not something a lender can quietly ignore.
The rules are under review. Draft amendments were published for comment in 2025, but they are not in force. The 2015 table above remains the current law.
The proof of income a lender will ask for
As part of the check, a lender will ask you to prove your income, usually your latest three payslips or three months of bank statements. This is the lender validating what you earn, not a form the law forces you to file.
To satisfy its legal duty, a lender has to be confident your income is real and current. So it asks for recent, genuine proof. For most salaried people that means your latest three payslips, or bank statements showing your last three salary deposits.
If your income moves around from month to month, through commission or overtime, the lender averages it over at least three pay periods. That stops one unusually big or small month from distorting the picture, in either direction.
A 2018 court ruling struck down the old, rigid rule that forced every applicant to hand over payslips. The court found it unfairly shut out people who are self-employed, paid informally or unbanked. The practical result is helpful: lenders can accept other authentic proof of income, not only payslips. What has not changed is that whatever you give must be genuine.
For the full list of what to have ready, see the documents you need for a personal loan. If you work for yourself, proving income when you are self-employed covers your options in detail.
What reckless lending means for you
If a lender skips the affordability check, or lends anyway when the numbers clearly do not work, a court can declare the agreement reckless. The consequences fall on the lender, and they protect you.
The National Credit Act treats a credit agreement as reckless in two main situations. The first is where the lender failed to do the affordability assessment at all. The second is where the lender did assess, but lent anyway despite information showing you did not understand the deal, or that the loan would leave you over-indebted.
Lenders are prohibited from reckless lending. If a court declares an agreement reckless, it can set aside part or all of your obligations, or suspend the agreement. During a suspension you may not have to make payments, and no interest or fees may be added while it lasts.
There is a plain takeaway here. An offer of a loan with "no affordability check" is a warning sign, not a shortcut. A registered lender cannot legally skip the check, so an offer that promises to is either not from a registered lender or is not telling you the truth. We explain this further in loans without an affordability check.
The flip side is your responsibility. These protections assume you answered the lender's questions honestly. Disclose every debt and give an accurate income figure, and the assessment works in your favour.
How to prepare so the check goes smoothly
You cannot skip the assessment, but you can make it easier to pass by going in with clean numbers and honest, complete information.
A little preparation widens the gap between your income and your commitments, which is exactly what the lender is measuring.
- Know your real take-home pay and add up every monthly debt repayment you already have.
- Have recent payslips or three months of bank statements ready before you apply.
- Where you can, pay off or close small debts first. Fewer monthly commitments means more discretionary income.
- Borrow only what fits comfortably inside that discretionary income, not the maximum you might be offered.
- Answer every question on the application truthfully and in full.
One caution on the term. Choosing a longer repayment term lowers the monthly instalment, which can help you pass the affordability check. But a longer term usually costs more overall in interest and fees. Stretching the term just to squeeze past the check can be an expensive way to borrow, so weigh the total cost, not only the monthly figure.
When you are ready, you can check your options with our NCR-registered lending partners in one short form. BetterLoans is an introducer, not the lender. The lender runs the affordability assessment and makes the final decision. No upfront fees, no obligation, and approval depends on affordability and lender checks.