Personal loans in South Africa: what borrowers need to understand in 2026

Explore the complexities of personal loans in South Africa, where household debt exceeds 60% of disposable income. With household debt still accounting for more than 60% of disposable income, personal loans remain both a pressure valve and a potential risk point for South African consumers. As uneven income growth and elevated living costs continue to strain budgets, platforms such asFatCat Loans, a South African loan comparison service, aim to improve transparency by enabling consumers to review multiple lending options in one place before committing to a personal loan.

According to the South African Reserve Bank (SARB), household debt stood at 62.4% of nominal disposable income in the second quarter of 2025, down from earlier peaks, but still high enough to leave many households financially exposed. Debt-service costs, meanwhile, absorbed 8.8% of disposable income, underscoring how sensitive household finances remain to even relatively modest borrowing decisions. Against this backdrop, financial analysts say the issue is no longer access to credit, but understanding how personal loans work, and how quickly costs can escalate when repayments are poorly aligned with household cash flow.

A personal loan is a form ofunsecured credit, meaning it does not require collateral such as a home or vehicle. Borrowers receive a lump sum that is repaid in fixed instalments over an agreed term, typically between 12 and 72 months.