When considering an unsecured personal loan, South African consumers often find themselves choosing between lenders like Capfin and Atlas Finance. These two prominent credit providers offer loan amounts suitable for smaller sums, like R3,000. But with different loan structures, fees, and interest rates, which one offers the best value?
Capfin vs Atlas Finance: Loan Terms and Overview
Both Capfin and Atlas Finance are regulated credit providers under South Africa’s National Credit Act (NCA). They offer personal loans, but their focus and lending terms differ, especially for smaller loan amounts such as R3,000.
Capfin targets larger, longer-term loans of up to R50,000, typically extending over periods of 6 to 24 months. It offers flexibility for customers needing a bit more time to pay off their debt.
Atlas Finance specialises in short-term microloans, providing amounts up to R14,000 for periods ranging from 2 to 6 months (61–180 days).
While both offer unsecured loans, it’s important to note that Capfin has a broader scope, offering larger loan amounts and longer repayment options, which could be more beneficial for someone who wants to extend the repayment period.
How the Costs Stack Up: Capfin vs Atlas Finance
To assess which lender is cheaper for a R3,000 loan, let’s compare the total repayment costs for typical loan term, 3 months (a common term for Atlas Finance’s offerings) and 6 months (available to both Capfin and Atlas).
Assumptions:
Max Interest Rate: Capfin charges up to 28% per annum (28% APR), while Atlas Finance can go up to 60% APR.
Fees: Capfin’s initiation fee is R747.50, with a monthly service fee of R79.35. Atlas Finance charges a higher initiation fee of R1,197.50 and does not specify a monthly service fee.
Credit Life Insurance: Capfin includes an estimated cost of R50 per month for credit life insurance. Atlas Finance’s policy is not clearly stated, so it’s omitted from the calculation.
Total Repayment Comparison: 3-Month & 6-Month Loan Terms
For a 3-Month Loan:
Capfin:
Interest: ~R210
Total Repayment: ~R4,346
Monthly Instalment: ~R1,449
Total Cost Difference: Capfin is R1,302 cheaper than Atlas (30% lower cost).
Atlas Finance:
Interest: ~R450
Total Repayment: ~R5,648
Monthly Instalment: ~R1,883
For a 6-Month Loan:
Capfin:
Interest: ~R420
Total Repayment: ~R4,944
Monthly Instalment: ~R824
Total Cost Difference: Capfin is R1,454 cheaper than Atlas (29% lower cost).
Atlas Finance:
Interest: ~R900
Total Repayment: ~R6,398
Monthly Instalment: ~R1,066
Why Capfin is Cheaper for a R3,000 Loan
Capfin comes out as the clear winner in both the 3-month and 6-month scenarios. With a maximum interest rate of 28% compared to Atlas Finance’s hefty 60% APR, Capfin’s overall cost is lower, especially when you factor in the longer-term options that reduce the impact of monthly fees.
While Atlas might offer faster access to cash, it comes at a high cost due to its steep APR and significant initiation fees. Capfin’s slightly higher fees, on the other hand, are offset by its lower interest rates, making it a more affordable option for most borrowers.
Detailed Breakdown of Both Lenders
Capfin Loan Overview
Loan Amounts: Capfin offers loans between R1,000 and R50,000, making it suitable for larger loans.
Loan Terms: You can borrow over periods of 6 to 24 months.
Fees: R747.50 initiation fee, monthly service charge of R79.35.
Interest Rates: Ranging from 5% to 28% per annum (variable based on your credit profile).
Credit Life Insurance: Included at an estimated R50 per month.
Eligibility: Requires proof of income (minimum R3,500 per month), an SA ID, and a bank account.
Pros: Offers lower overall costs and longer repayment periods, making it ideal for those who need more time.
Cons: Monthly service fees add up, and affordability checks can be stricter.
Atlas Finance Loan Overview
Loan Amounts: Available loans range from R1,000 to R14,000.
Loan Terms: Shorter loan terms, ranging from 61 days to 180 days (about 2 to 6 months).
Fees: R1,197.50 initiation fee; no monthly service fee specified.
Interest Rates: APR can be as high as 60%, with a possible reduction to 36% for subsequent loans.
Credit Life Insurance: Not clearly stated, so it has been omitted from calculations.
Eligibility: Requires proof of income and no SASSA grants.
Pros: Fast approval and same-day payout available.
Cons: Very high APR, and shorter repayment periods can lead to steep monthly payments.
Which One Should You Choose?
If you’re looking for the cheaper option with a focus on affordability over time, Capfin is the better choice for a R3,000 loan. It offers a lower interest rate and more flexible repayment options, making it the ideal solution for those who prefer to spread payments over a longer period.
However, if you’re in need of a quicker loan and can manage higher monthly payments, Atlas Finance might work for you. Just be aware that while you may receive funds faster, the cost will be significantly higher due to the APR.
Check also: Top 10 Small Loan Options in South Africa: A Practical Guide to Borrowing Smart
Overall, Capfin offers a much cheaper option for a R3,000 loan when compared to Atlas Finance. With lower interest rates and more flexible loan terms, Capfin stands out as the more affordable and practical choice for most borrowers.
Have you used Capfin or Atlas Finance for a personal loan? Share your experience with us in the comments below!
