Your guide to personal loans in South Africa

A loan can help you meet your financial obligations, but do you know which type of loan is best for you?

In this guide, we explore personal loans, how they work, what to expect when you apply for one, and common myths and misconceptions. We also compare various banks’ personal loan offerings.

Tip: Get a personal loan of up to R350,000 through Sanlam, a trusted JustMoney partner.

Introduction to personal loans 

A personal loan can be helpful if you need ready cash to meet specific financial needs, for example, to cover medical bills, pay school fees, or consolidate debt.

Such a loan can help you cover costs in an emergency, pursue life goals such as tertiary studies, or provide debt relief.

A personal loan is typically unsecured, which means you don’t have to put up any assets as security, such as a house or car.

You’ll need to repay the loan amount – along with fees and interest – to your creditor over a specified period. The interest rate you’re offered will typically be based on your credit profile. If you have a solid credit record, you will enjoy low interest rates, but if your credit record is not in good shape you’ll be charged a higher interest rate.

Also bear in mind that the interest on a personal loan is usually higher than the interest charged on a loan that’s tied to an asset, such as a car, because it presents more of a lending risk.

Types of personal loans available

Personal loans come in various forms, each tailored to meet different financial needs and situations.

Here’s an overview of the types of loans available:

• Unsecured personal loan. Personal loans are usually unsecured, meaning no assets are required as collateral. However, they often come with higher interest rates and stricter borrowing limits than secured loans.
• Secured personal loan. Secured personal loans are backed by an asset such as a car or property. As a result, they often attract lower interest rates – but your asset is at risk if you don’t make your repayments. Some financial institutions offer secured personal loans – enquire whether a potential lender offers these. 
• Payday loan. This type of short-term loan must usually be paid in full when you get your next salary or wage. Be cautious, as they tend to come with high fees and interest. 
• Debt consolidation loan. A debt consolidation loan is a new loan you take out to pay off multiple debts, leaving you with a single monthly payment. You’ll need to show you can comfortably make your repayments to qualify.

How to get a personal loan

Every bank or lender has different rules for giving out personal loans. Here’s what you need to know.

• The amount you qualify for can differ from one lender to another.
• Interest rates vary between lenders.
• Some lenders offer fixed rates, meaning the interest rate remains unchanged for the duration of the loan. Others offer variable rates.
• Lenders may offer different repayment terms. 

Before approving your loan, a lender will check your credit score, how much you earn, and how much debt you already have compared to your income.

Before you select a loan provider, research different lenders. Compare their offerings and check which loan will best fit your financial circumstances.

Make sure you understand all the terms and conditions. Read the fine print and ask questions if you need clarity.

Importantly, ensure you can afford the total cost of the loan (the principal amount plus interest, fees, and any other costs).

By doing this, you’ll be able to choose the best solution for you.

Some leading lenders, and their personal loan terms 

We’ve done some of the homework for you. Here’s our guide to personal loans available in South Africa, along with their qualification criteria. All prices were correct at the time of writing.

Absa 

What you need to apply: 

• Your South African ID document or smart ID card.
• Your last three months’ payslips or bank statements.
• Non-Absa customers will also need proof of residence, such as a municipal or rates account not older than three months.

How to apply:

• Visit www.absa.co.za/personal/loans/for-myself/personal-loan and click “Apply now”.
• Contact 0860 100 372 to make an enquiry.
• Visit your nearest Absa branch.
• 2. African Bank 

What you need to apply: 

• Your South African ID document or smart ID card.
• Most recent proof of income, for example, a payslip.
• Your last three months’ bank statements, or in lieu of this, payslips.
• Non-African Bank customers require proof of residence – for example, a municipal or rates bill not older than three months.

How to apply:

• Existing African Bank clients can apply online at www.africanbank.co.za/en/home/product-personal-loan.
• Call 0860 333 004 or 0800 633 633.
• Visit an African Bank branch.
• You can upload your loan documents online and check the progress of your loan application by calling 0861 111 011.

3. Capfin 

 What you need to apply:

• Your South African ID document or smart ID card.
• Your last three months’ payslips or bank statements.

How to apply:

• Apply online at www.capfin.co.za/apply-now/application-details. You can upload your documents on Capfin’s secure online platform, email your documents to docs@capfinmail.co.za with your South African ID number in the subject line, or fax them to 086 688 0000 (again with your ID number as the reference).
  If you bank with Absa, African Bank, Standard Bank, or Nedbank, Capfin can obtain your documents at no extra cost.
• You can also apply via SMS to 33005.
• Visit any PEP or Ackermans store, where staff will assist you by scanning your documents and applying to Capfin on your behalf. 
• Contact 087 354 0000 or WhatsApp 066 000 0683.

4. Capitec Bank 

What you need to apply:

• Your South African ID document or smart ID card.
• Your last three months’ payslips or bank statements showing three consecutive salary deposits, if not paid into your Capitec account.
• Capitec accepts self-employed applicants and those with multiple income streams, but you must accept “self-employed” as employment type when applying online.

How to apply:

• Visit www.capitecbank.co.za/personal/credit/personal-loan or apply on the Capitec app.
• Call Capitec direct lending on 0860 66 77 89.
• Visit your nearest Capitec branch.
  

5. First National Bank (FNB)

 What you need to apply:

• Your South African ID document or smart ID card.
• Proof of residence not older than three months.
• A stable income, paid into your FNB account for at least three months. If your income changes, you may be required to submit proof of income for the previous three months. 
• If you’re a non-FNB customer, you will also need a South African Revenue Service (SARS) notice of assessment (ITA34), and three months’ bank statements if you’re self-employed.

How to apply: 

Current and potential customers can apply using several channels. 

• Visit www.fnb.co.za/loans/personal-loan.html and click “Apply now”.
• Apply via the FNB app.
• Call 087 335 8630 for personal loan applications.
• Visit an FNB branch. 

6. Nedbank 

 What you need to apply:

• Your South African ID document or smart ID card.
• Your most recent salary slip, or a letter from your employer if you’re on contract.
• Your last three months’ payslips or bank statements.

How to apply:

• Existing Nedbank clients can visit https://personal.nedbank.co.za/borrow/personal-loans.html or the Nedbank Money app.
• Call Nedbank Personal Loans on 0860 103 582.
• Visit your nearest Nedbank branch. 

7. Sanlam 

What you need to apply:

• Your South African ID document or smart ID card.
• Recent proof of residential address.
• Last three months’ payslips or bank statements, or original bank-generated PDF statements as proof of income.

How to apply:

• You can apply online at www.sanlamonline.co.za/personal/credit-solutions/personal-loans.
• Make a new loan application by calling 0860 726 526. 
• You can apply for a Sanlam-backed personal loan on the JustMoney platform.

Standard Bank 

What you need to apply:

• Your South African ID document or smart ID card.
• Your last three months’ payslips or bank statements, or six months’ payslips if you’re self-employed.
• Proof of residence, for example, a utility bill not older than three months.
• A three-month bank statement, if you’re not a Standard Bank account holder.
• If you’re not an existing Standard Bank customer, you must also supply a SARS notice of assessment (ITA34) certificate.

How to apply:

• Visit the Standard Bank loan page and click on “Apply now”.
• Via the Standard Bank app. Set up your profile, sign in, click “Next” to continue, then click “Borrow”. 
• Call personal banking on 0860 123 000. 
• Visit a Standard Bank branch. 

Alternatives to personal loans 

If a personal loan is not a good fit for you, there are alternatives. These may offer lower costs, greater flexibility, and/or access to funds for specific needs.             

Some options include:

• An overdraft facility. This is a flexible credit option linked to your bank account that allows you to borrow money when your balance is low, up to a set limit based on your creditworthiness. It’s useful for short-term financial needs.
• A credit card. This option allows you to borrow funds from your card issuer to pay for purchases. It works with major payment networks, such as Visa, Mastercard, and American Express and is accepted worldwide.
• An employee or salary advance. This is money advanced to you by your employer before you earn it, and is deducted from your future wages or salary. It’s different from a loan since it’s an early payment of your salary. 
• A payday loan. This is a short-term, unsecured loan taken out against your income. You’re expected to partially or fully repay the loan by your next payday. Payday loans have a bad reputation, because the associated fees and interest rate can be very high. They can also be abused – if your creditor requires you to sign a contract agreeing that your company’s payroll department may deduct instalments from your salary, this is a red flag. 

Personal loan tips

Is a personal loan the right solution for you? Ask yourself the following questions:

• Do I really need a personal loan? Consider alternatives such as an overdraft, credit card, or selling assets to free up cash. Avoid borrowing for luxuries or holidays. 
• Will I qualify for a loan? You can do this by using a personal loan calculator. This will show you the instalment amount you can expect to pay, based on various interest rates. Don’t apply for loans with multiple lenders, however, as this could affect your credit score. 
• Can I get the amount I need for my purposes? Borrow only what you need, since extra credit may come with higher costs.  
• What will the loan cost me over time? Work out the total cost, including interest and fees. Ensure the monthly repayments fit your budget comfortably. 
• Which lender is right for me? Look for the best rates and terms. If you plan to repay early, check for penalties – some lenders charge fees for early settlement. 

Personal loan myths

Myths about personal loans can create confusion for borrowers. Here are some common misconceptions.

• Personal loans can only be used for urgent financial needs. In fact, they can be used for various purposes, from home improvement and education to paying for a wedding or consolidating your debt. Be clear about why you want the loan and what your financial responsibilities will be.
• Personal loans have high interest rates. Personal loans often attract high interest rates, but they may, in fact, be lower than credit card rates. The interest rate usually depends on your credit score and the lender’s policies.
• You can only get a personal loan with a perfect credit record. You don’t need a perfect credit record to get a personal loan. Some lenders offer loans to people with fair or even poor credit scores, but terms vary widely. 
  Avoid unregistered lenders as they can lead you into financial trouble. Check for registered credit providers on the National Credit Regulator’s website.
• Applying for a personal loan will hurt your credit score. A single loan application won’t harm your credit score. However, multiple applications in a short time can lower it temporarily. Responsible credit use will help your score recover over time.

Tips for managing monthly payments

Managing your personal loan repayments responsibly not only helps you to avoid financial stress, but also protects your credit reputation.

Here are some tips for savvy money management:

• Borrow wisely. Only borrow what you need, and factor the loan amount into your budget.
• Account for costs. Include interest and fees in your monthly loan repayment plan.
• Automate payments. Set up debit orders to go off on payday to avoid missing payments.
• Pay extra when possible. Make extra payments to reduce your debt faster.
• Seek help early, if needed. If you’re struggling to repay your loans, contact your lenders. They may offer alternative repayment options.

The importance of maintaining a good credit history

Having a good credit score means you’re considered trustworthy and able to repay a loan. This opens doors to financial opportunities, such as buying a home, getting an education, or starting a business.

A good credit score can also help you save money by helping you to secure better loan terms. Who doesn’t like having extra cash in their pocket?

It is a good idea to maintain a good credit history – but if your credit score is low, you can take steps to improve it, by:

• Making payments on time and in full
• Limiting your credit use to avoid high-interest debt
• Monitoring your credit report to check for errors or potential fraud

A personal loan, used responsibly, will ultimately have a positive impact on your credit score.

If you’re considering using credit to help you achieve your financial goals, a personal loan offering personalised interest rates and affordable instalments could be a good solution.

Tip: If you need financial support for unexpected expenses, consider a personal loan from a trusted JustMoney partner.