# Regulatory Compliance Category > National Credit Act Forum >  How to charge interest?

## ruth

Does anyone know how to work out the charging of interest.  If someone owes you lets say R120 000.00, since 2005.  How would you work out the interest?  I know its something like 0.365 x the amount outstanding, but can't remember.

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## Dave A

If it is simple interest - ie. interest is charged on the capital only, the calculation is pretty simple.

*Daily calculation.*
Capital amount x no. of days x annual interest rate / 365 = interest due

*Monthly calculation.*
Capital amount x no. of months x annual interest rate / 12 = interest due

For compound interest it all gets far more complicated.

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## ruth

Thanks for that..

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## Dave A

No problem - just glad you didn't ask for the formulas for compound interest.  :Wink:

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## AndyD

Please can you give the formulas for compound interest calculations Dave :-)

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## Brett Bentley

From an accounting view point Dave is 100% correct from a legal perspective, there are 2 issues to consider:

1. Does the agreement falls with the NCA;
2. Does the original agreement cover the issue of interest.


If the agreement falls within the NCA, the interest is determined by the amount that the agreement states, provided that such interest complies with the NCA provisions on interest.

If the agreement falls outside the NCA, then the provisions of the agreement on interest apply provided they comply with common law in duplum (interest can never exceed capital).

If the agreement falls outside the NCA and is silent on interest, then the provisions of the Prescribed Rate of Interest Act apply and you can make formal demand for payment within a prescribed period, failing which you can then charge mora (over due) interest at the prescribed rate, which is currently 15.5% per annum (straight line, not compounded).

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## ruth

_If the agreement is silent on interest, then the provisions of the Prescribed Rate of Interest Act apply and you can make formal demand for payment within a prescribed period, failing which you can then charge mora (over due) interest at the prescribed rate, which is currently 15.5% per annum (straight line, not compounded)._

I think this one applies.  So lets say the amount outstanding is R120 000.00 Do i take that amount and times it with 15.5%,  that equels R18600.00, must i still divide that with 12 months.  Or do i charge the full R18600.00 for the year x the number of years to be charged?
Thanks for the help

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## Brett Bentley

Unfortunately Ruth, if you have not previously made demand for payment of the capital by a specified date, stating that failing which interest will be charged, then you will have to do that now and you can only charge interest from the date specified in your demand.

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## BusFact

Ruth, perhaps give us more detail on the nature of the debt, why its still outstanding and why you want to charge interest.

That will eliminate all the "but if" scenarios.

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## ruth

It is for rehabilitation maintenance owed to me by my ex husband.  There is a divorce contract.  That states that he has a two year period to pay me a certain amount of money.  That was from 2005-2007.  There is still an amount outstanding, and want to know if I can charge him interest.

Something else related, is a vehicle.  That is mentioned in the contract by make and reg number.  This vehicle was repo'd by the bank, as he wasn't paying it.  As far as I know, this has now been auctioned off.  So I have no way of getting that car back.  What do I do now?  If i go to the courts, they say open up a case at the police, the police say, they can't issue open up a case or issue a warrant, as the car is no longer with him.  So now what?

Thanks

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## Dave A

> Something else related, is a vehicle.  That is mentioned in the contract by make and reg number.  This vehicle was repo'd by the bank, as he wasn't paying it.  As far as I know, this has now been auctioned off.  So I have no way of getting that car back.  What do I do now?


Obviously he can't give you what he no longer has posession of, so I suggest convert that portion of the claim to value - ie reduce it to Rands and cents.

Ascribing value is always a good thing anyway. When it comes to delivering property there is always the issue of whether the supplier has the right to give away ownership of the property in the first place - particularly true when it comes to vehicles still under finance.

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## sterne.law@gmail.com

You could sue him through the maintenance court or the normal magistrate or High Court.
Probably the civil court will be better -
You claim the maintenance amountYou claim the amount the value of the car would be today(book value will be a close betYou claim the interest on the maintenance amount according to how the payment was scheduledYou claim damages for the period you did not have use of the carYou claim costs of the action
If the claim exceeds R100 000, the magistrates court will not have jurisdiction, which makes it a high court matter, which in turn tend sto be more expensive. If both of you agree, in writing, then the matter can be brought before a magistrates court with relevant jurisdiction.
Depending on the final contract, you will probably find it is already an order of the court which means you could proceed to get a writ of execution on the contractual amount outstanding. The maintenance payment is an actual amount and there is therefore no dispute or need to work out the amount owing. this would allow you to get the writ for this amount and thereafter sue for the damages and the car element.
The reason for non payment will determine your course of action going forward. If your ex is genuinely in a financial tight spot, then you may consider giving him some new terms. The fact that you had a divorce order with a lump sum payment makes me believe that he is a good earner or has own business. I would also suggets that if giving new terms that you get some legal advice. you do not want him to renege and not pay on time and then claim that prompt payment has never been an issue. 
Of course if his non payment is merely malicious or not caring, then I do not think you have any other option but to sue for the money.

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BusFact (16-Aug-10)

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## Adrivn

I worked as an estate agent. When I left the company they didnt pay out my commission. It is now 10 years later and still busy with court cases. The change co names. Didnt pay cipra fees etc. I want to know how is the interest on this worked out. The amount is roughly R300000.00

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