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Financial Glossary

Key financial terms used in South African lending, explained in plain language.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Administration Order

An administration order is a court arrangement for people whose total debts don't exceed R50,000. The court appoints an administrator to manage your repayments — basically they col...

Adverse Listing

A mark on your credit report showing you've missed payments, defaulted, or ignored a judgment. Stays for 1-5 years depending on what it is. One adverse listing can kill your loan a...

Affordability Assessment

The NCA requires lenders to check whether you can actually afford to repay a loan before they hand over the moola. They look at your income, your existing debts, and how much you s...

Annual Percentage Rate (APR)

The total yearly cost of borrowing expressed as a percentage. It's basically the interest rate plus fees and charges bundled together — that's the real price of credit. In SA, lend...

Arrears

When you miss a loan repayment, you go into arrears. Simple as that. The bank sends demand letters, it tanks your credit score, and if you keep missing payments, they might take yo...

B

Balloon Payment

A massive lump-sum payment at the end of your loan, usually for cars. It drops your monthly payment, looks good on paper, but you need to pay it or refinance when it comes due. Pla...

Bank Statement

Your bank statement is basically a confession of your spending habits. It shows deposits, withdrawals, how much you're burning monthly, and what random stuff you're paying for. Len...

Blacklisted

South Africans love to say they're 'blacklisted' — it's our way of saying you've got a dodgy credit record. Technically there's no actual blacklist, but you might have defaults, ju...

Bond (Home Loan)

A bond is what South Africans call a home loan — you borrow huge money to buy a house, the house itself is the security (they can sell it if you don't pay), and you pay it back ove...

Bond Originator

Someone who shops your home loan application to multiple banks at once instead of you walking into FNB, then Nedbank, then Absa, then Standard Bank separately. They're free for you...

Bridging Loan

You want to buy a new house but your old one hasn't sold yet. Or you're waiting on a big payment that's confirmed but not in your account. A bridging loan is short-term money to br...

Budget

Your money plan. Write down what comes in (salary), what goes out (rent, food, debt, taxes), and what you've got left. Do it monthly. A solid budget stops you burning through cash ...

Buy Now Pay Later (BNPL)

Buy stuff now, pay later in chunks. Usually interest-free if you pay on time. PayJustNow, PayFlex, and Float do this. Convenient but if you miss a payment, fees pile up and your cr...

C

Clearance Certificate

The paper that says you're done. Your debt counsellor issues it when you've paid off all your restructured debt. It goes to the credit bureaus and updates your record — you're no l...

Collateral

An asset — usually your car or property — that you pledge to the lender as security. If you don't pay, they take it. That's why secured loans (backed by collateral) have lower inte...

Compound Interest

Interest on interest. When you save, it's your best friend — your money grows faster because the interest itself earns interest. When you borrow and don't pay, it's your worst enem...

Cooling-Off Period

After you sign a credit agreement, you've got five business days to change your mind and cancel it, no questions asked, no penalty. The law (Section 121 of the NCA) says so. You've...

Cost of Living

How much money you need every month just to exist — rent, food, transport, electricity, data. In Johannesburg it's way higher than Durban or Cape Town. If your rent is R8,000 in Sa...

Credit Agreement

The contract between you and the lender — it spells out everything: the loan amount, the interest rate, when you need to pay it back, what fees they'll charge, and what happens if ...

Credit Bureau

These are organizations that keep track of your entire credit history — every loan you took, every payment you made or missed, every default or judgment against you. The main ones ...

Credit Card

A credit card is you saying to the bank 'lend me money whenever I swipe, and I'll pay you back later.' You get a limit (say R20,000), you spend up to that, and you can pay the whol...

Credit Impaired

Your credit record is kak — you've defaulted, got a judgment, or you're under debt review. Banks see you as high-risk. New credit is tough to get. Some sketchy lenders will still g...

Credit Life Insurance

This insurance covers your loan if something bad happens — death, disability, retrenchment, illness. If you die, it pays off the outstanding balance so your family isn't stuck with...

Credit Limit

The maximum amount a lender says you can borrow on a credit card, store account, or overdraft. They set this based on what they think you can afford. Go over it and you'll get char...

Credit Profile

Your credit history lives at TransUnion, Experian, and Compuscan — it's basically a report card that shows every account you've ever opened, every payment you've missed, and every ...

Credit Provider

Any business or person offering credit to people must be registered with the NCR. Banks, micro-lenders, shop accounts, and car finance companies all need to be on the NCR register....

Credit Report

Your complete financial history, all recorded in one place. It shows who you've borrowed from, whether you paid on time, any defaults or judgments, and every credit enquiry made on...

Credit Score

Your financial reputation boiled down to a number between 0 and 999. The higher you go, the more likely lenders will approve you and give you a better interest rate. Build it by pa...

Credit Score Range

Your credit score is a number between 0 and 999 (on TransUnion) or 0 to 705 (on Experian) that basically rates your financial behaviour. Anything above 650 is decent. Below 500 is ...

Credit Utilisation Ratio

How much of your available credit you're using. Hit R10,000 limit, owe R3,000? That's 30%. Keep it under 30% and your credit score stays healthy. Go above 50% and lenders think you...

D

DebiCheck

DebiCheck is a South African debit order authentication system introduced by the Payments Association of South Africa (PASA) and operated through BankServAfrica. It requires a borr...

Debit Order

A debit order is you saying 'yes, take money from my account on this date every month.' It's how most loan repayments work in South Africa. You sign once, then the lender just coll...

Debt Consolidation

Roll all your debts into one loan. One payment, one interest rate, usually cheaper. But watch out — pay it back or you'll just get into the same mess again. And it might take longe...

Debt Counselling

Formal debt relief under the NCA — a registered debt counsellor negotiates with your creditors to lower your monthly repayments. The court protects you while you're under review, s...

Debt Review

Same thing as debt counselling — it's the official term. Once you apply, you're flagged at every credit bureau. You can't take new credit until you've completed the process or a co...

Debt Snowball Method

Pay off your smallest debt first while paying minimums on the rest. Once that's gone, roll that money into the next smallest. It's psychology — you get wins fast, which keeps you g...

Debt Trap

The spiral. You borrow to pay old debt. New debt to pay new debt. Each month you're deeper. It's hectic and it's how people end up at debt counsellors. The NCA exists partly to sto...

Debt-to-Income Ratio

Basically the percentage of your income that goes toward debt repayments. If you earn R25,000 and pay R10,000 monthly toward debts, your ratio is 40%. Most lenders say 40-50% is th...

Default

You failed to pay a loan as agreed. Three missed payments and — boom — the lender registers a default on your credit report. This torpedo's your credit score and stays on your file...

Disbursement

Once your loan is approved and you've signed all the paperwork, the lender actually has to give you the money. That's disbursement. Usually hits your account within 24 to 48 hours....

E

Early Settlement

You're allowed to pay off a loan early — the NCA guarantees this right. The lender might charge an early settlement fee (capped at three months' interest), but you save money overa...

Emergency Fund

Money you lock away for when stuff breaks. Your car, your phone, your job. Three to six months of living costs is the goal, but even R500 a month helps. It stops you borrowing from...

Emolument Attachment Order (EAO)

A court order that tells your boss to deduct money straight from your salary to pay off debt. Also called a garnishee order. They can't take more than 25% of your gross salary, and...

F

FICA Compliance

Banks and lenders have to verify you're actually you (and not some fraud) before they give you credit. FICA is the law that says they have to check your ID, confirm your address wi...

Financial Literacy

Knowing how to handle money without blowing it, understanding how loans work, how interest stacks up, the difference between saving and investing — that's financial literacy. South...

Fixed Interest Rate

An interest rate that doesn't move for the entire loan term. Your payment stays the same whether the repo rate goes up or down — that's your security. The tradeoff: if rates drop, ...

G

Garnishee Order

A court order (called an Emoluments Attachment Order in modern SA law) that tells your employer to deduct money from your salary to pay a debt. It's what happens when you've missed...

Grace Period

A window of time after a payment is due where you can still pay without getting smacked with penalties or being reported as late. Some credit cards give you 25+ days. Most personal...

Gross Income

Your total earnings before tax and deductions — the number your employer and the government see. When lenders ask for 'gross income' on an application, they want this figure. It's ...

Guarantor

A guarantor is a person who agrees to take legal responsibility for repaying someone else's debt if that person fails to meet their repayment obligations. By signing a guarantee, t...

I

In Duplum Rule

A SA legal rule that stops interest from spiralling out of control. Once the interest charges equal the original amount you borrowed, no more interest can accrue — ever. So a R10,0...

Initiation Fee

A once-off fee charged when you get a new loan — the lender's admin cost for processing your application and setting up your account. The NCA caps it, and it varies by lender. It g...

Instalment Sale Agreement

You pay for stuff in chunks over time. The items — usually a car or furniture — are collateral. You don't own them until the last payment. If you default, they repossess. Common fo...

Interest Rate

The percentage charged annually on your outstanding loan balance. Different loans have different rates: personal loans might be 18-28%, car loans 14-20%, home loans 9-12%. The NCA ...

J

Judgement

The court ruled against you in a debt case. Now it's official — you owe this money. A judgement gets published on your credit report and basically tells every lender in the country...

L

Loan Application

You want a loan, so you ask for one. The lender needs proof you're not a fraud, that you actually earn, and that you won't blow the money on nonsense. So you give them your ID, pay...

Loan Shark (Mashonisa)

Illegal money lender — unregistered, operates in shadows, charges insane interest (sometimes 50% per month). In SA we call them mashonisas. They're criminals. If they can't show NC...

Loan Term

How long you've got to pay back the loan — measured in months. Longer terms mean smaller monthly payments but way more total interest. A R50,000 loan at 20% over 24 months costs le...

M

Micro-Lender

Small lenders who give you quick cash, usually R500 to R8,000, and usually at prices that make you wince. They exist for people the banks say no to. Legal ones are NCR-registered. ...

Monthly Service Fee

A recurring fee the lender charges every month for administering your loan account — processing payments, sending statements, that sort of thing. The NCA caps it. It's small per mo...

N

National Credit Act (NCA)

South Africa's credit law (Act 34 of 2005). It sets the rules for how lenders operate: they must do affordability assessments, they can't charge crazy interest, they must give you ...

National Credit Regulator (NCR)

The government watchdog for the credit industry in SA. They register lenders, credit bureaus, and debt counsellors. If a lender breaks the rules, you can complain to the NCR. They ...

Net Income

Your take-home pay — the money that actually lands in your bank account after PAYE tax, UIF, pension, medical aid, and other deductions. This is the real number that matters for yo...

O

Overdraft

Your bank lets you spend more than you actually have, up to a limit they've set. You're borrowing from the bank to cover the overage. Interest is charged daily on whatever amount y...

P

POPIA

South Africa's data protection law (Protection of Personal Information Act, Act 4 of 2013). When you apply for credit, lenders collect your personal info — name, ID, income details...

Payday Loan

Quick cash for emergencies, due back on your next payday. Usually R2,000 to R8,000. The interest is hectic — 60% annual sometimes. Use it once, never get stuck in the cycle. Regula...

Payment Holiday

The bank lets you skip a month or two of repayments because you're in a rough spot. But here's the kicker: interest keeps stacking. So you're not saving money, you're just delaying...

Payslip

Your payslip is proof you actually work and how much you earn. It's the most basic thing lenders need to see — no payslip, no loan, full stop. It shows your gross pay, all the dedu...

Personal Loan

An unsecured loan (no collateral required) that a bank or lender gives you based on your creditworthiness. In SA, personal loans usually range from R1,000 to R300,000, with terms o...

Pre-Approval

Pre-approval is the lender saying 'yeah, you probably qualify for like R100,000' before you've jumped through all the hoops. It's not a promise — just a heads-up that you're probab...

Prescribed Debt

Debt that's so old (usually 3 years unpaid) that the creditor lost their legal right to collect it. The creditor had to take court action within the time limit or lose it. Prescrib...

Prime Lending Rate

The benchmark rate SA banks use to price loans — sitting at repo plus 3.5%. When SARB moves the repo, prime follows. If your loan is variable, this number matters to you every mont...

Principal Amount

The actual amount you borrow — the bit that matters. Everything else (interest, fees) gets added on top. When you pay your loan, some goes to interest first, and the rest chips awa...

Proof of Income

Lenders have to prove you can actually afford to pay them back — that's the law, the NCA says so. If you're employed, they want payslips. If you're self-employed or work cash-in-ha...

R

Reckless Lending

When a lender gives you credit without checking if you can actually afford it — or when you didn't understand what you were signing up for. The NCA takes this seriously; a court ca...

Refinancing

You've got a loan you're paying off, interest rates have dropped, or your credit score improved and now you qualify for better terms. So you take out a new loan to pay off the old ...

Repayment Schedule

A breakdown of every payment you'll make on a loan — how much interest, how much principal, when you'll be done. Also called an amortisation schedule. It's the real tea on what you...

Repo Rate

The rate the South African Reserve Bank charges commercial banks when they borrow money. When SARB cuts or hikes the repo, the prime rate follows, which means your home loan or car...

Repossession

You don't pay your car loan or furniture account, the lender gets sick of you, and they literally take the goods back. That's repossession. The law says they have to send you a Sec...

Revolving Credit

Credit that you can use, pay back, and use again without reapplying every time. Credit cards are the classic example — you've got a R20,000 limit, you can spend it, pay it off, and...

S

SASSA Grant

Monthly cash from SASSA — the South African Social Security Agency. For pensioners, people with disabilities, caregivers. If SASSA is your main income, some lenders will give you a...

Section 129 Notice

Before a credit provider can take you to court over unpaid debt, they're legally supposed to send you a Section 129 notice. It tells you you're in default, says what you owe, and g...

Secured Loan

A loan where you pledge an asset — your car, house, whatever — as collateral. If you default, the lender can seize it. The lower risk for them means lower interest rates for you. W...

Sequestration

When the court declares you're officially broke and takes all your stuff to pay back creditors. It's the legal nuclear option in SA. You lose assets, your credit record gets trashe...

Short-term Loan

A loan you pay back in weeks or months, not years. Usually has hectic interest — sometimes 30%+ — but it's fast and meant to cover emergency stuff. Payday loans fall here.

Stokvel

A group of people (usually friends, family, or neighbours) who pitch in money regularly — sometimes weekly, sometimes monthly — and take turns receiving the lump sum. Some do it fo...

Store Account

Credit from retail stores — Edgars, Mr Price, Woolworths, Pick n Pay. You buy stuff and pay monthly. Interest is hectic — usually 21-26% — way more than personal loans. Gets report...

T

Tax-Free Savings Account (TFSA)

Money you save that earns interest tax-free. All the growth stays yours — no SARS tax. You can put in R36,000 a year, R500,000 lifetime. Most SA banks offer TFSA. It's one of the b...

Total Cost of Credit

The real number — everything you'll actually pay by the end. Principal, interest, fees, insurance, service charges, the lot. Lenders have to show you this before you sign. This is ...

Two-Pot Retirement System

New retirement system from September 2024 that splits your fund into two: savings pot (one-third, you can access once a year) and retirement pot (two-thirds, locked until you retir...

U

Unsecured Loan

A loan that doesn't need collateral — no car, house, or anything to pledge. Approval is all about your income, credit score, and whether the bank thinks you can repay. The catch: w...

V

Variable Interest Rate

Interest that changes as the repo rate changes. Tied to prime. Your monthly payment can go up or down without warning. Not great for budgeting, but sometimes the rate drops and you...

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