From the country’s leading personal loans to the lenders who offer the fastest and most reliable service to customers, this is your ultimate guide to South Africa’s top personal loans.

Although personal loans are generally considered to be unsecured they may be secured and range from as little as R300 to R300,000. Personal loan terms in South Africa range from 1 month to 84 months and loans can be obtained from a wide range of banks and alternative credit providers.

What are South Africans using personal loans for?

Smaller personal loans are being used to pay for unexpected expenses such as repairs on a broken down car, medical bills, repairs to geysers and home appliances. A small percentage of borrowers use the money for holidays and purchasing items they cannot afford outright.

Secured vs unsecured personal loans

Secured personal loans will generally be those secured against your home or the equity in your home. This means that if you do not currently have a mortgage you will be required to take out a more expensive unsecured personal loan.

Personal loans taken out for the purpose of purchasing a vehicle may also be secured on the vehicle being purchased.

Unsecured personal loans come in a wide range of forms and can take the form of a short-term loan with a 3 month repayment term or a large personal loan of R100,000 with a 72 month repayment term.

Term loans versus revolving loans

Term loans come with a set loan term such as 24 months. You will need to make a monthly instalment on the loan until your loan term is up and your debt is settled.

Revolving loans do not have a set loan term and allow you to borrow money once you have repaid a certain amount or percentage of your initial loan back. Revolving loans work like credit cards but can offer much larger sums of money, up to R300,000.

How much interest will I pay on a personal loan?

According to the National Credit Act a short-term loan is any loan of R8,000 or less with a loan term not exceeding 6 months. For this types of loan you may not be charged more than 5% interest per month or, a total of 30% over the maximum 6 month loan term period.

When it comes to larger unsecured personal loans the National Credit Act stipulates that lenders may not charge more than the current repurchase rate x 2.2 plus 20%. The current repurchase rate is sitting at 6.5%.

Taking the above into consideration the actual rate that a provider will offer you will be entirely based on your own credit score and affordability. All major South African banks have their own guidelines, affordability checks and requirements and you may find that you’ll qualify for a better rate at one bank and be completely rejected by another.

Personal loan options from South Africa’s leading banks

  • Absa offer personal loans that range from R250,00 to R350,000 with loans terms from 35 days to 84 months. Absa claims that if you’re offered a lower interest rate elsewhere, they’ll beat it. Their personal loans include a monthly service fee and an initiation fee just as Nedbank does.
  • Capitec offers personal loans up to R250,000 with loan terms ranging from 1 to 84 months and interest rates starting from 12.9%. Capitec only offers fixed rate personal loans and allows customers to use the personal loan to consolidate debt.
  • FNB offer personal loans that range from R1,000 to R300,000 with loans terms from 1 to 60 months and customers also get to earn eBucks. They also offer a repayment break in January and will allow you to settle your loan in full without paying any early settlement penalties.
  • Nedbank currently offers personal loans between R2,000 and R300,000 with loan terms from 6 to 72 months and interest rates ranging from 10% to 27.5%. It is important to note that Nedbank charges an initial admin fee as well as a monthly admin fee.
  • Standard Bank offer both a term loan as well as a revolving loan option. They offer up to R300,000 with 60 months to repay for a revolving loan and up to 72 months to repay for a term loans. One of the great features about their personal loans is that you can repay the loan early without incurring any penalty fees. You need to be between 18 and 65 to apply.

Alternative personal loan providers in South Africa

In addition to the above leading South African banks, there are other banks such as African Bank, Virgin Money and Tyme Bank to name but a few. You can also get a short-term loan from leading micro-lenders like Boodle, udu, Wonga and Capfin to name but a few.

These alternative lenders offer much lower sums of money and may have higher interest rates but their application process is open to new customers and is generally quick and easy.

Tips when taking out a personal loan in South Africa

  • Always consider a range of options and compare loans where possible
  • Always make use of a lender that is registered with the National Credit Regulator
  • Never pay any fees upfront for a loan, especially if you are opting for a short-term loan
  • Never take out a loan to repay existing loans or debt
  • Always make use of a loan calculator to see how much a loan is going to cost your overall as well as how much you will be expected to pay on a monthly basis

Borrow only what you need

Whatever the reason that you’re looking to obtain a personal loan it is important to only borrow as much as you need and always try to make use of alternative sources of cash or any means to avoid taking on credit before making a loan application.

A simple addition of a loan repayment to your monthly bills and debit order may not seem like much but if emergency expenses arise and unplanned events and circumstances arise you may find yourself struggling to stay afloat.