Barko Loan Affordability

How to check if you can afford a loan

Step 1: Start with your take-home pay

Write down your net salary (the actual amount deposited into your bank account each month after deductions). This is your baseline. Expenses and repayments must fit within this number.

Step 2: List all your fixed monthly expenses

Include rent or bond repayments, travel or transport costs, school fees, groceries, and any existing debit orders, monthly living expenses or loan repayments. These are your non-negotiables. Barko also assesses payroll deductions and garnishees as part of our affordability assessment, so it helps to have a complete picture before you apply.

Step 3: Calculate what is left

Subtract your total monthly expenses from your take-home pay. The remaining amount is what is realistically available for a loan repayment. If it feels tight, consider applying for a smaller amount or waiting until your financial position is more favourable. If there is room to breathe, you are likely in a good position to apply.

Step 4: Look at the repayment amount, not just the loan amount

This is an important step that is easy to overlook. A loan repayment includes the loan amount plus regulated fees and interest. At Barko, you will always receive a clear, written quotation before committing to anything, so there are no surprises.

Remember: every cost is disclosed upfront before you put pen to paper. T’s and C’s apply.

Knowing the total repayment amount (not just the loan amount) is what makes budgeting accurate.

Here is an example of an R1 000 short-term loan calculation repaid over one month (first loan application in a calendar year with Barko):

Interest

Interest is the cost a credit provider charges you for borrowing money. For short-term credit agreements, the NCA caps the maximum interest a credit provider may charge at 5% per month on the first loan and 3% per month on subsequent loans taken within the same calendar year. Interest is calculated on the deferred amount (capital amount plus initiation fee).

Initiation fee

The initiation fee is a once-off charge that covers the credit provider’s cost of setting up your loan. It is payable only when a new credit agreement is established and may not be charged on a transactional basis where no new agreement exists. The maximum initiation fee for short-term credit transactions is calculated as follows:

• For a loan amount up to R1 000: the maximum initiation fee is R165 plus VAT.
• For a loan amount exceeding R1 000: the maximum initiation fee is R165 plus 10% of the difference between the loan amount and R1 000.
• The initiation fee may never exceed R1 050.
• The initiation fee may never exceed 15% of the loan amount.
• Whichever limit is reached first (R1 050 or 15% of the loan amount) applies.

Service fee

The service fee is a monthly charge that covers the credit provider’s operational costs of administering your loan, such as processing repayments, communication, and record-keeping. The NCA caps this fee at a maximum of R60 plus VAT per month. If your loan starts partway through a month, the service fee for that first month is charged on a pro rata basis.

Insurance: mandatory credit life

A credit provider may require you to maintain credit life insurance for the duration of the loan. This insurance covers the following:

• Outstanding balance in the event of death.
• Monthly instalment(s) in the event of temporary disability.
• Outstanding balance in the event of permanent disability.
• Monthly instalment(s) in the event of unemployment.

The maximum prescribed cost for short-term credit transactions is R4.50 per R1 000 of the deferred amount (capital amount plus initiation fee) per month.

Important: the credit provider may not force you to buy their specific policy. You have the right to substitute your own credit life insurance from any registered insurer, provided it meets the minimum cover requirements.

Optional cover

The NCA permits the maximum credit life insurance premium to be increased by R1.00 per R1 000. This insurance covers the following:

• Outstanding balance in the event of death.
• Outstanding balance in the event of temporary disability.
• Outstanding balance in the event of permanent disability.
• Outstanding balance in the event of unemployment.

The credit provider may not compel the consumer to take out this additional cover. This means the total permissible credit life insurance cost, including both mandatory and optional benefits, is R5.50 per R1 000 of the deferred amount (capital amount plus initiation fee) per month.

Step 5: Be honest about your spending habits

Fixed expenses are easy to track, but variable spending, like takeaways, airtime, data or entertainment, can quickly add up. Factor in a realistic estimate of your day-to-day spending when calculating your loan affordability. An honest assessment now prevents financial pressure later.

Step 6: Ask a Barko consultant if you are unsure

You do not have to work this out alone. Barko consultants are trained to guide clients through the loan affordability process with care and zero pressure. If you are not sure whether you can afford a loan or if it suits your current situation, speak to us first. We would rather help you make the right decision than rush you into one that does not serve you.

What Barko checks on your behalf

When you apply, Barko conducts a full affordability assessment as required by the NCA. This includes a review of your net income, existing debit orders and debt obligations, monthly living expenses, and any payroll deductions or garnishees. This process is not just a legal requirement; it is how Barko ensures every approved loan is truly manageable for you. We only approve what you can truly afford to repay.

Conclusion

A little preparation before you apply makes a big difference. When you understand your income, know your expenses, and check the full repayment amount upfront, you borrow with confidence and repay with ease. Loan affordability is not about earning more, but about knowing your numbers.

At Barko, we are here to make that process simple, transparent, and supportive from start to finish. When you are ready, we are ready.

Visit www.barko.co.za to learn more and start your application today.

The difference is Barko.

Barko Financial Services (Pty) Ltd, trading as Barko Loans, is a Registered Credit Provider (NCRCP 1764) and an Authorised Financial Services Provider (FSP 45614).

Terms and conditions apply. All credit is granted subject to a mandatory affordability assessment and credit check.