R5,000 covers a lot, from a major repair to a bundle of bills. It is also large enough that the term you choose changes the price by hundreds of rand.
Here is what a R5000 loan costs at the legal maximums, and when something else is cheaper.
What does a R5000 loan cost?
Loans of up to R8,000 that are repaid within six months are short-term credit under the National Credit Regulations.
For a first loan in a calendar year, the caps are 5% interest a month, an initiation fee of R165 plus 10% of the amount above R1,000 (R565 on R5,000), a service fee of up to R60 a month and VAT on the fees.
Here is what that adds up to. This assumes equal capital repayments, and your quote may be lower.
| Term | Total cost | You repay | Per month |
|---|---|---|---|
| 1 month | about R969 | about R5,969 | R5,969 |
| 2 months | about R1,163 | about R6,163 | about R3,081 |
| 3 months | about R1,357 | about R6,357 | about R2,119 |
| 6 months | about R1,939 | about R6,939 | about R1,156 |
The longer term lowers the monthly amount, but adds about R970 over one month. The monthly service fee and the interest run for longer.
How does the one-month cost add up?
For one month, the working is:
- Interest: 5% of R5,000 = R250.
- Initiation fee: R165 + 10% of R4,000 = R565.
- Service fee: R60.
- VAT on the fees: 15% of R625 = R93.75.
- Total: R968.75.
At R5,000 the cost is about 19% of the loan for a month. That is lower than the 31% on a R1,000 loan, because the fixed fees spread over more rand.
When is something else cheaper than a R5000 loan?
At this size, other options start to compete:
- A bank or other personal loan over a longer term, which may be cheaper per rand if your record is good. See personal loans.
- A payment arrangement with the person you owe, for example a repair shop.
- An employer advance or a stokvel payout.
- A smaller loan that covers only the urgent part. A R2,000 loan costs less in total than R5,000. See R2000 loan.
What do lenders check for a R5000 loan?
A registered lender must assess whether you can afford the repayment. At R5,000 that usually means a close look at your income, regular costs and existing debt.
Lenders may ask for three months of bank statements, so have them ready. If you are self-employed or paid in cash, see loans without a payslip.
How do you pick the term for a R5000 loan?
Choose the shortest term whose instalment you can pay without borrowing again next month. Use the table above as a guide.
For example, a R2,119 instalment for three months saves about R582 compared with six months, but only if it fits next to your rent, food and transport.
How do you stay safe?
- Check the lender on the NCR register.
- Get the written quote before you accept.
- Refuse any fee before payout.
- Keep the agreement and proof of every payment.
Read online loan scams if an offer is unsolicited.
How much of your pay would a R5000 loan take?
The monthly amount is what you feel. Here are the average monthly repayments from the table above as a share of take-home pay.
| Take-home pay | 3 months (about R2,119) | 6 months (about R1,156) |
|---|---|---|
| R12,000 | about 18% | about 10% |
| R15,000 | about 14% | about 8% |
| R20,000 | about 11% | about 6% |
On R12,000, three months takes nearly a fifth of your pay for a quarter of a year. Whether that is manageable depends on what is left after rent, food and transport. Work it out with our loan affordability guide before you choose the term.
What changes if it is not your first loan this year?
The National Credit Regulations cap interest at 5% a month for a first short-term loan in a calendar year, and at 3% for later ones. The initiation and service fees stay the same. Here is the one-month R5,000 cost at each.
| First loan | Later loan | |
|---|---|---|
| Interest | R250 | R150 |
| Initiation fee | R565 | R565 |
| Service fee | R60 | R60 |
| VAT on the fees | R93.75 | R93.75 |
| Total cost | R968.75 | R868.75 |
The later loan is R100 cheaper, but that is not a reason to borrow again. If you are on your second R5,000 loan in a year, the fees are still large, and the pattern matters more than the price.
Ask yourself whether the shortfall is a one-off or a monthly one.
What if you need more than six months?
Short-term credit is defined as an amount of up to R8,000 repaid within six months. If you need longer than six months, the loan is a different kind of credit, with different caps and often a lower cost per month, but a longer commitment.
That is why a R5000 loan is the point at which comparing a short-term loan with a personal loan from a bank or another registered lender makes sense.
A longer term can lower the instalment, but check the total repayment, because the service fee runs for every month. See personal loans for the comparison.
How do you make sure you borrow only what you need?
Write down what the R5,000 is for, line by line. For example: a car repair of R3,200, an overdue account of R1,300 and R500 for transport until payday. Then ask whether any line can be handled another way.
If the overdue account can be put on a plan, you may need R3,700. A R3,700 loan costs about R800 for a month at the caps, against about R969 for R5,000. Trimming the amount to the real need is the quickest way to cut the cost.
What should you do before you sign for a R5000 loan?
At this size, give yourself a night. Compare at least two quotes, check the total repayment in rand and test the instalment against your lowest month, not your best. If the loan is for a repair, get a second repair quote first.
If it is for an overdue account, ask for a payment plan.
A R5000 loan is a large commitment for a short-term product. Sleeping on it costs nothing, and the quote will still be there in the morning.
Frequently asked questions
Can I get a R5000 loan with bad credit?
Some lenders consider weaker records. Expect a smaller amount or a higher price. Approval is not guaranteed.
Is the interest the same on a bigger loan?
The cap is the same percentage, but the initiation fee grows with the amount, up to a maximum of R1,050.
Can I settle early to save money?
Yes. You have the right to repay early. Ask for a settlement figure first. See settling a loan early.
What if I cannot repay?
Contact the lender before you miss a payment. See debt review if several debts are piling up.
Is a R5000 loan short-term credit?
Yes, if it is repaid within six months. Short-term credit covers amounts up to R8,000 over no more than six months.
Is the second R5000 loan in a year cheaper?
The interest cap is lower, 3% a month instead of 5%, but the initiation and service fees are the same. The total is about R100 lower for one month.
One free 5-minute form is sent to NCR-registered lenders. Each lender decides for itself and shows you the full cost before you sign.
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