Loans in South Africa


South African consumers have access to a wide array of loan options from which to choose. It’s important for consumers to choose the right type of loan for their individual needs. For instance, if you need finance for a short term, a credit card may be more ideal than a personal loan. If you have a poor credit record, a secured loan may be ideal for you as it’s considered a low-risk loan by lenders and it may be easier to qualify for.

Debbie Sharwood, Head of Communications of South Africa, says consumers take out loans for different purposes, but often do so without understanding or considering the type of loan being offered.

“If a loan is taken out when it isn’t needed, or is not the right type of loan, consumers could end up paying higher interest rates than are necessary, creating unnecessary debt and can even place their assets in danger in the event that they default on the loan.”

Secured Loans

Lenders consider this type of loan to be low-risk. The amount that is loaned is secured against an asset that the borrower owns. If you default, you stand to lose the asset/collateral.

Unsecured Loans

No collateral is required to apply for these loans. They are also typically available in smaller amounts over a shorter period of time. Interest rates are higher than secured loans, because the loans are higher-risk. These are some of the most popular loans in South Africa.

Home Loan

This is a type of secured loan, specifically aimed at funding the purchase of a home. Lenders normally require a deposit to be paid.

Credit cards

Credit cards are types of loans. The consumer is offered money to spend, which they will have to pay back with interest.

The cards come with specific credit limits and interest rate that are higher than those of unsecured loans.

Student Loans

Student loans are typically used to cover the costs of study fees, textbooks, accommodation, equipment and other study-related costs. These are popular loans in South Africa, as more people strive to further their education in an effort to improve their standards of living.


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