How Banks Calculate Your Personal Loan Affordability Under the NCA
To prevent reckless lending, the National Credit Act requires every South African credit provider to conduct a strict affordability assessment before approving a loan. Here is the exact calculation lenders perform.
Gross Income vs. Discretionary Income
Lenders start with your verified gross monthly income (validated against 3 months of bank statements and payslips) and deduct statutory deductions (PAYE income tax, UIF, pension/provident fund contributions) to arrive at your net income.
From your net income, the lender deducts your declared living expenses (subject to statutory minimum living expense norms set by the NCR) and all existing debt obligations appearing on your credit bureau report. The remaining amount is your discretionary income available to service a new loan.
Preparing Your Documents for Fast Approval
Having clear PDF copies of your last 3 months’ bank statements, your latest payslip, and a valid SA ID ready before applying prevents delays during the affordability verification stage.
Frequently Asked Questions
Why did a bank offer me a smaller loan amount than I requested?
If the statutory affordability calculation shows that the monthly instalment on your requested amount would exceed your verifiable discretionary income, the lender is legally required by the NCA to reduce the offer to an affordable amount or decline the application.
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