The three numbers
An initiation fee. A once-off charge for setting the agreement up. It is charged at the start and it is capped by the National Credit Act, both as a percentage and as a maximum rand amount.
A monthly service fee. A flat monthly charge for running the account, also capped. On a short loan this is a bigger share of what you pay than most people expect, because it is charged per month regardless of how small the balance has become.
Interest. The percentage everybody looks at first, charged on the outstanding balance, also capped, and the cap depends on what kind of credit agreement it is.
The number that actually tells you
Ignore all three for a moment and find the total repayable — the amount you will have handed over by the end if you pay exactly as agreed. Every quote has to show it. Subtract what you are borrowing and you have the real cost of the loan in rand.
Two offers with the same interest rate can have very different totals, because the fees are not the same and the terms are not the same. The total is the only figure that is not affected by how the offer has been presented to you.
Why a longer term is not automatically cheaper
Stretching a loan over more months brings the instalment down, which is sometimes exactly the right thing to do. It also adds more months of interest and more monthly service fees, so the total goes up.
Ask for the total on both terms and compare them side by side. Pick the shortest term whose instalment you can comfortably carry every single month, not the one with the smallest number on it.
Four questions worth asking any lender
What is the total repayable? What is the instalment, and on what date does it come off? What happens if I pay it off early? And what happens if I miss one — what does it cost, and who do I phone?
A lender who cannot answer those four in plain language, in writing, before you sign, is telling you something useful about what the rest of the relationship will be like.