Warning to lovers taking out loans for love

Some people willingly take on debt for their romantic partners. After all, as the saying goes, “I’d take a bullet for you” – so what’s a little debt compared to that? Well, the problem starts when love goes, and the relationship ends.

This is when that act of love transforms into a financial liability. Salem Nyati, consumer financial education specialist at Momentum Group, says there are dangers with couples sharing debt. She warns that when partners take out personal loans for each other or co-sign loans, it often leaves one person with no money and heavy debt if the relationship ends.

“Despite good intentions, taking on debt for someone else can quickly place you under financial strain and compromise your ability to support your own household,” she says. “The emotional toll of a breakup is already significant; financial consequences shouldn’t add to that burden.” Nyati cites TransUnion’s Consumer Credit Index Report, which found that South Africa’s household debt is 62.7% of disposable income, with nearly 1 million consumer accounts in arrears. She cautions that when people with substantial personal debt take on additional obligations for romantic partners, they risk their financial stability and family security.

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“The scenario plays out in several ways, ” she says, suggesting that a partner might take out a personal loan, with their significant other co-signing as security. “Alternatively, one partner might guarantee a credit facility, apply for a joint loan, or allow their name to be added to an existing credit agreement. In each case, the person taking on this obligation becomes legally liable for the full debt, regardless of what happens in the relationship.” Nyati says when the relationship ends, the legal obligations remain unchanged.

The debt does not disappear simply because love has left the building. Instead, it becomes what Nyati refers to as “loan debris”, the financial wreckage left behind when romance ends. “People often do not realise they have agreed to something that will follow them indefinitely,” she says.

“If your partner defaults on a loan you have co-signed or guaranteed, creditors will recover the money from you. “A default will damage your credit record and may compromise your ability to secure finance for your own priorities; securing a home, education or unexpected emergencies.”

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