Why Personal Loans Are Rising Fast in South Africa

Understanding the Surge in Personal Loans Across South Africa

Even with improved consumer confidence and recent financial policy updates, like the launch of the two-pot retirement system, the sad reality is that many South Africans are still struggling to meet their daily financial needs. And as living costs continue to rise faster than income, more people are relying on personal loans in South Africa to bridge the gap.

According to a report, a striking 91% of those who entered debt counselling in the first quarter held personal loans. One-month loans are increasingly being used to cover essential expenses, highlighting just how critical these short-term solutions have become.

Let’s take a look at the reasons why more South Africans are turning to personal loans.

Rising cost of living

Essential living costs have risen dramatically over the past nine years.

• Electricity prices are up by 135%
• Petrol has increased by 88%
• Cumulative inflation has reached 52%

These rising costs have taken a toll on disposable income. On average, consumers seeking debt help in early 2025 spent 69% of their net pay on debt repayments, marking the highest rate since 2017. Those earning R5,000 or less used 76% of their income to manage debt, while even high-income earners making over R35,000 allocated 77% — both figures reaching the highest levels since 2016.

Buying power has dropped significantly

When compared to 2016, South Africans now have 53% less purchasing power. Although inflation may be stabilising, the average income for newer earners is still 1% below where it was nine years ago, so they turn to personal loans in South Africa to afford essentials and other needs.

Widespread debt pressures

After paying their debts, most people only have about 25% of disposable income for basics like water and electricity. Many families have had to pause important insurance and financial protection policies as food inflation puts additional pressure on household budgets.

Staple foods are more expensive these days, pushing inflation at higher rates between 2% and 4% and affecting lower-income households. Even high earners aren’t safe from inflation because their unsecured debt has grown by 34% over the past nine years, with a sharp 90% increase for those earning R35,000 or more, setting a new high.

Looking for personal loans?

At FindBetter, we’re here to support your financial journey, whether you’re looking for debt counselling or exploring personal loans in South Africa. Complete our online form, and one of our advisors will reach out to you for a free consultation tailored to your situation.