Sanlam Personal Loans: Charging excessive interest

I borrowed R80 000 from Sanlam Personal loans on the 27th of August 2020 at an interest rate of 24.50% (fixed rate).

Under the REGULATIONS IN TERMS OF THE NATIONAL CREDIT ACT, 34 OF 2005 No. 489 of 31 May 2006, Regulation 39 (Definitions) defines the “Deferred amount” as the principal debt less any amounts paid towards the settlement of the principal debt. Regulations 40.1-2 (Interest calculation) specifies that Interest may be calculated daily and may be added to the deferred amount monthly.

The calculation of interest (daily) must be as follows: (Deferred amount for the day x interest rate)/ Number of days in the year.

Using the interest amount formula prescribed in the regulations, the amount of interest should decrease over time as the principal debt amount decreases. I have however noted from my monthly Sanlam statements that the monthly interest amount has remained a constant R2388,65 amount despite my having substantially paid down the principal debt amount.

Please refer to the below: Statement date: Principal debt balance (Interest for the month) 31 Oct 2020: R83 153.55 (R2388.65) 30 Nov 2020: R82 410.21 (R2388.65) 31 Dec 2020: R81 655.34 (R2388.65) 31 Jan 2021: R80 885.06 (R2388.65) 28 Feb 2021: R80 099.12 (R2388.65) 31 Mar 2021: R79 297.14 (R2388.65) 30 Apr 2021: R78 478.78 (R2388.65) 31 May 2021: R77 643.71 (R2388.65) 30 Jun 2021: R76 791.59 (R2388.65) 31 Jul 2021: R75 922.08 (R2388.65) 31 Aug 2021: R53 034.81 (R2388.65) 30 Sep 2021: R44 629.43 (R2388.65) 31 Oct 2021: R37 205.56 (R2388.65) 30 Nov 2021: R24 262.83 (R2388.65) 31 Dec 2021: R1720.86 (R2388.65)

I have queried this with Sanlam Personal Loans and received a response from Quinita Ryke (Customer Relationship Management Team) on the 31st of December who indicated that “The annual interest rate on the loan is fixed, Therefore the extra payments made will not change the monthly interest, It will only decrease the loan term.”

While I agree with Quinita Ryke that the interest rate is fixed,

It appears to me that Sanlam Personal Loans has made a non-compliance with regulation 40.1&2 by not taking into account the reduced “deferred amount” in calculating the monthly interest amount.

I therefore do not agree that the interest amount will remain the same irrespective of the increased principal debt repayments and therefore consider it that Quinita Ryke has not answered my question as to why the interest amount has been fixed.

By my estimation, the fixing of the interest amount has led to me paying an excess R1438 amount of interest, refer to the below Google docs link for my spreadsheet calculations.

https://docs.google.com/spreadsheets/d/14WRfbVebqYrpM7KygY-lqgK85R723OHm/edit?usp=drivesdk&ouid=***&rtpof=true&sd=true