2. Limits

This guide will help you configure the Capital and Instalment parameters for your loan product. These settings are essential for defining how loans are issued and repaid while ensuring financial sustainability and regulatory compliance.

Capital Settings

  1. Minimum Loan Capital Amount

    • Defines the smallest amount of capital that can be issued for a loan. This value ensures that the loan size remains practical and manageable for both the lender and the borrower.

    • Input Example: R150.

  2. Maximum Loan Capital Amount

    • Sets the upper limit for the loan capital. This prevents borrowers from taking loans that exceed the lender’s capacity or the borrower’s ability to repay.

    • Note: The National Credit Regulator (NCR) mandates that the maximum loan capital for Short Term Credit Transactions cannot exceed R8,000.

    • Input Example: R8,000.

  3. Cooling Off Period

    • The cooling-off period specifies the number of days within which the borrower can cancel the loan without any penalties or fees. This ensures flexibility for the borrower.

    • Input Example: 5 days.

  4. Capital Rounding

    • This setting determines how loan amounts are rounded down after applying fees or levies, ensuring affordability. The capital amount will be rounded down to the nearest specified value (e.g., R1, R10, or R100).

    • Input Example: Nearest R1.

    • Example Scenario: If the loan capital after costs is R4,587.20 and the rounding is set to the nearest R10, the final amount will be R4,580.00.

Future Payout Settings

Should the values below be greater than zero, the future payout feature will enabled fo rthe particular loan product.

For more information on future payouts 🔽

  1. Minimum Days Before Scheduled Payout

    • This specifies the minimum time, in days, that must pass between the loan approval and the loan payout.

  2. Maximum Days Before Scheduled Payout

    • Specifies the maximum time allowed between loan approval and payout.

Instalment Settings

  1. Minimum Loan Period

    • The minimum duration over which the loan must be repaid. This setting helps define the repayment structure, ensuring that instalments are spread across a realistic timeframe.

    • Input Example: 1 month.

  2. Maximum Loan Period

    • Sets the maximum period over which the borrower can repay the loan. This limit is crucial to ensure that the loan does not extend indefinitely and fits the business model of the lender.

    • Input Example: 6 months.

  3. Minimum Days Before First Instalment

    • This setting defines how soon after the payout the first instalment can be collected.

    • Input Example: 2 days after payout.

  4. Maximum Days Before First Instalment

    • Defines the latest possible date for the first instalment collection.

    • Input Example: 60 days after payout.

  5. Instalment Rounding

    • Just like capital rounding, this feature rounds down the instalment amount to make it affordable for the borrower, considering potential financial constraints.

    • Input Example: Nearest cent.

    • Example Scenario: If the instalment amount is R547.85 and rounding is set to the nearest cent, the final instalment amount will be R547.00.


Best Practices

When configuring these limits, it is important to strike a balance between borrower affordability and lender sustainability. Ensure that the loan amounts, terms, and repayment conditions are practical for your target audience while adhering to regulatory standards.

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