Abstract
The National Credit Act’s requirements for an affordability assessment were insufficient to enable the credit provider to correctly evaluate and determine whether a consumer could afford all the obligations under the proposed credit agreement. The National Credit Regulations, Including Affordability Assessment Regulations, sought to address this lacuna by requiring credit providers to follow a specific procedure when performing an affordability assessment. Unfortunately, these regulations are ambiguous and still lack the necessary detail to enable a credit provider to determine whether the consumer can afford all the obligations under the proposed credit agreement for its entire lifespan without becoming overindebted. This study compares South Africa against foreign and international legal perspectives on affordability assessments to highlight the lessons which may be helpful to the South African consumer credit landscape. Further issues under this study’s purview include investigating buffers to make consumers more resilient to unexpected expenditures. The use of stress testing to ensure that the consumer can afford their obligations for the entire duration of the context of the increasing interest rates and suitability testing to establish whether the proposed credit satisfies the needs of the consumer. The study concludes with a proposed framework that the legislature could adopt concerning the affordability assessment aligned to best international practices and foreign law perspectives on affordability assessments.