The Affordability Assessment a South African Lender Must Do, and the Documents It Asks For

A South African credit provider may not grant you a loan until it has assessed whether you can afford it, and the law tells it broadly how to do that. Under the National Credit Act the provider has to take practicable steps to verify your gross income, then work out your discretionary income by subtracting statutory deductions, a prescribed minimum for living expenses, and the repayments on debts you already have. Only what is left may be committed to a new instalment. That single rule is the reason the document list barely varies between lenders: three recent payslips, or bank statements showing three recent salary deposits, identification, and your credit bureau record.

What does the National Credit Act actually require?

Two ideas do most of the work. The first is the duty to assess: before entering a credit agreement the provider must take reasonable steps to establish your existing financial means, prospects and obligations, your understanding of the risks and costs, and your debt repayment history. The second is the consequence of skipping it. Credit granted without that assessment, or granted when the agreement would leave you over-indebted, can be declared reckless credit, and a court can suspend the agreement or set aside some or all of the provider's rights under it.

That is why a lender refusing you is not being awkward: the assessment is done on paper and on arithmetic rather than on impressions. Regulations made under the Act set out the method in more detail, including how income must be validated and how minimum living expenses are treated. The prescribed figures are amended from time to time, so read the current regulations rather than any summary, including this one.

How is affordability calculated, step by step?

The structure is consistent even where the prescribed numbers move:

1. Gross income, verified. Not what you say you earn — what your documents show.
2. Less statutory deductions and compulsory deductions, so tax and the like come off first.
3. Less a minimum for living expenses. The regulations use income bands with a fixed amount plus a percentage of the income above the floor of your band, so the allowance rises with income rather than being one flat figure. You may be asked to declare your actual expenses too, and an implausible declaration will be queried.
4. Less your existing debt repayments, taken from your credit bureau record rather than from memory. This is where applicants are most often surprised: a store account, a vehicle instalment, a phone contract and a revolving facility all count.
5. What remains is discretionary income, and the new instalment has to fit inside it.

Working the arithmetic yourself before you apply is the point of a planning tool. The independent, unofficial Capfin Loan App - SIM & CALC listing on this site describes a loan simulation, calculator and guide that runs estimates on figures you type in. It is not a lender and cannot assess you, but it lets you see the shape of an instalment before a declined application lands on your bureau record.

Which documents will a lender ask for?

Expect this list, in some combination:

• Proof of income. For a salaried applicant, the usual requirement is your three most recent payslips, or bank statements showing your three most recent salary deposits. Three is the number because the regulations frame income validation around the latest three.
• Bank statements. Often requested even when payslips are supplied, because they show the salary actually arriving and your committed debit orders.
• Identification. A South African ID or a valid passport and permit.
• Proof of residence, a lender's own verification requirement rather than a figure in the formula.
• Consent to a credit bureau check. Your obligations and payment history come from the bureaux, and the enquiry itself is recorded.
• A signed declaration of income and expenses. Understating your expenses to make the sums work can invalidate the assessment.

If you are self-employed, commission-earning or informally paid, there is no payslip to validate, so providers substitute their own evidence requirements — typically a longer run of bank statements and financial or tax records. Those requirements vary by lender, so ask before you start gathering paper.

Why are affordable-looking applications still declined?

Usually for one of five reasons, none of them about your honesty. Income could not be verified in the form required, even though it is real. The bureau record shows obligations you had forgotten. Payment history, not affordability, is the problem: recent arrears, a judgment or an administration order. Your pay is irregular, so the latest three deposits understate a normal month. Or you are under debt review, in which case new credit is generally off the table until the process ends and the record is cleared.

If you believe credit was granted to you without a proper assessment, that is a specific complaint with a specific route. The National Credit Regulator registers credit providers, handles complaints about conduct under the National Credit Act, and is also where you confirm that a lender is registered at all. Reckless lending findings are made by a court or the National Consumer Tribunal, not by the lender, and a registered debt counsellor is the usual starting point when the real problem is total indebtedness rather than one agreement.

Frequently asked questions

Can a lender grant credit without checking affordability?

No. Assessment is a duty on the credit provider, not a courtesy, and credit granted without it can be found reckless, with a court able to suspend the agreement or strip the provider of rights under it.

Why three payslips and not one?

Because income has to be validated rather than stated, and three consecutive periods show whether a figure is normal. If your earnings swing, say so and ask what alternative evidence the lender accepts.

Does a declined application damage my credit record?

The enquiry is recorded, and a cluster of enquiries in a short period reads badly to the next lender. Check your own bureau record and your arithmetic before applying, rather than applying to several lenders to see who says yes.

Can an app tell me whether I will be approved?

No. A calculator can estimate an instalment and show you where your discretionary income stands; approval is a decision by the credit provider on verified documents. Never enter your ID number, bank account number, card details, a password or a one-time PIN into any third-party app or website.

Work out the arithmetic before the application, not after the decline: verified gross income, less statutory deductions, less a realistic living allowance, less every existing repayment on your bureau record. To rehearse that on your own figures, the independent, unofficial app on Google Play is a loan simulation, calculator and guide with no account, no login and no personal data. It is not an official representative of Capfin and is not affiliated with, endorsed by, or connected to Capfin, nor with the National Credit Regulator. It does not offer loans and cannot be used to apply for one, does not process applications, does not disburse funds, does not check application status and cannot access any account. All figures are estimates for planning only; confirm the actual terms with the credit provider directly.