Most South Africans ever use personal loans to make ends meet
If it was not for personal loans and pay-day loans, many South African consumers would not be able to afford food and other necessities.
Almost all South Africans who applied for debt counselling use personal loans to make ends meet, despite an improvement in consumer confidence and the rollout of the two-pot retirement system that provided some financial relief.
Consumers are using personal loans to make up the shortfall between income and the rising cost of living. Unlike the minister of finance, who can use taxes to make up the budget deficit, they have no other avenues to plug the shortfall.
According to the DebtBusters' Debt Index for the first quarter of 2025, 91% of consumers who applied for debt counselling in the first quarter had a personal loan, a new record for the number of applicants who have a personal loan. Another 37% had a one-month loan, also known as a payday loan.
Benay Sager, executive head of DebtBusters, says it is clear that while consumers may feel a little more positive, personal loans, especially one-month loans, remain a lifeline for many because their income has not kept up with their increasing expenses.
ALSO READ: South Africans reliant on loans to keep heads above water
Price increases since 2016 made it impossible to live without personal loans
Over the past nine years, electricity tariffs increased by 135% and the price of petrol by 88%, while the compound effect of inflation is 52%. As a result, consumers who applied for debt counselling in the first three months of the year needed on average 69% of their take-home pay to service their debt.
Sager points out that this is a significant increase compared to previous quarters and the highest since 2017.
The most vulnerable consumers, taking home less than R5 000 per month, use 76% of their income to repay debt, while people earning more than R35 000 spend 77% of their income to repay their debt.
According to Sager the ratios for these income groups are the highest since DebtBusters started analysing the data in 2016.
ALSO READ: What you need to know about personal loans
Consumer debt in 2025 compared to 2016 shows why consumers have personal loans
Compared to 2016:
Consumers now have 53% less buying power. Although the impact of inflation subsided recently, the average nominal income of incoming groups is now 1% lower than in 2016, and cumulative inflation over the nine years is 52%. However, there is better news for people taking home more than R35 000 per month as their nominal income increased by 11% since 2016, the first significant growth for some time.
Consumers in most income bands spend 25% of their disposable income after paying their debt to pay for water, electricity, rates and transport. Food inflation has meant many had to sacrifice insurance cover. For people in lower-income groups, who spend a larger portion of their income on food, food inflation meant that they experienced inflation of 2% to 4% higher over the past few years.
Top earners have unsustainable levels of unsecured debt. On average, unsecured debt levels are 34% higher than nine years ago, but for people taking home more than R35 000 per month, it increased by 90%, the highest ever.
ALSO READ: Is the interest on your personal loan within legal limits? Here's how to find out
Fewer enquiries about debt counselling
Sager says debt counselling enquiries were 'a bit muted' during the first quarter of 2025 compared to previous years. He attributes this to uncertainty about the macroeconomic environment, access to retirement funds and 'some negative marketing against debt counselling'.
'Debt counselling is still the best way to help consumers restructure their debt. While the average interest rate for unsecured debt has come down from an eight-year high to 25.3%, under debt counselling, it can be reduced to ~2.5% per year, allowing consumers to repay expensive debt faster.
'Vehicle debt and balloon payments can also be paid over a meaningful period by getting the average financed vehicle interest rate of 14.9% a year negotiated down to a more manageable level.'
According to Sager, the number of consumers who completed debt counselling increased 11-fold since 2016. Consumers who received their clearance certificates in the first quarter of 2025 paid back over R700 million to their creditors.
'Interest in online debt management was up by 6% during the quarter compared to the same period last year, with subscriptions for DebtBusters' online proprietary tools, Debt Radar and the Debt Sustainability Indicator, now exceeding 1 million.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The South African
3 hours ago
- The South African
Updated OUTLOOK for July 2025 SASSA Old-Age Grants
After last week's payout, July 2025 SASSA Old-Age Grants will remain unchanged for next month. As it stands, over 75s who receive July 2025 SASSA Old-Age Grants will be benefiting from the highest-paying grant in the country. And it is for this reason that October 2025 increases are uncertain. Nevertheless, the first social welfare payout in the second half of the year will go ahead in just three-weeks from now, on Wednesday 2 July 2025. As mentioned, over 75s can expect R2 330 deposited into their bank accounts. While beneficiaries aged 60-74 can bank on R2 310 to help make ends meet. Although by only a few days, July 2025 SASSA Old-Age Grants are paid slightly earlier than usual next month. Image: File As we've been tracking throughout the year, the South African Social Security Agency has rarely been out of the spotlight. It started in January when the High Court ruled that SASSA cannot excluded applicants purely to satisfy budget constraints. Then February was overwhelmed by the National Treasury's inability to nail down an official budget for the year. While this happened, SASSA went ahead with annual increases in April 2025. The Finance Minister confirmed these would be higher than inflation, but that was posited on government's proposed VAT increases. Therefore, in May and June, when a second fiscal budget was overturned, there was plenty of consternation over whether 2025 SASSA grant increases may be reversed. However, the social welfare budget for 2025/26 (R280 billion) thankfully remains, so July 2025 SASSA Old-Age Grants can go ahead as usual. It's still unconfirmed whether SASSA Old-Age Grants will increase again in October 2025, like they have done previously? Image: File If you're over 60, applicants secure their July 2025 SASSA Old-Age Grants by visiting a branch during office hours (Monday to Friday 08h00 to 17h00). Be sure to bring the following along with you: South African identity document (ID) – smart card or green booklet. Documents proving marital status. Proof of residence (a utility bill with your name on it qualifies). Confirmation of proof of income and/or financial dividends. Any information regarding your assets, including a valuation of property. Declaration of any private pension in your name (if applicable). Valid three months' statements certified by your bank (not more than three months old). Unemployment Insurance Fund (UIF) membership book, or discharge certificate from your previous employer. A copy of your will, and first and final liquidation and distribution accounts if your spouse has passed away in the last five years. It is imperative that you keep your SASSA profile up to date (especially if you move) so you don't trigger a verification process against you. Image: File The Department of Social Development (DSD) has instigated strict mandatory checks to ensure no one is stealing taxpayer money. These involve double-checking your details with Home Affairs, Correctional Services, and Unemployment Insurance Fund. Likewise, there is a strict identity (via biometrics), means and asset test for all new grant applicants. As many as 200 000 clients have had to verify their details at a SASSA branch and had their grants withheld without review. Critically, the agency only wants those who do not have sufficient means through a private pension, savings and personal assets, to apply for July 2025 SASSA Old-Age Grants. As such, SASSA officials will enforce the following income and asset limits on your application: You must earn less than R8 070 per month ( R96 840 per year) if single. per month ( per year) if single. Earn less than R16 140 per month ( R193 680 per year) if married. per month ( per year) if married. Your total assets must not be less than R1 372 800 if single. if single. If married, your total assets must be less than R2 745 600. If you are unsuccessful in applying for July 2025 SASSA Old-Age Grants, you have 90 days to appeal by clicking HERE and completing all relevant documents. Can you believe we're already into the second half of the year? Check out these all-important payment dates below. Image: File Be sure to diarise the remaining payment dates for July 2025 SASSA Old-Age Grants and beyond: JULY – Wednesday 2 July 2025 AUGUST – Tuesday 5 August 2025 SEPTEMBER – Tuesday 2 September 2025 OCTOBER – Thursday 2 October 2025 NOVEMBER – Tuesday 4 November 2025 DECEMBER – Tuesday 2 December 2025 Likewise, take note of these important SASSA contact details for your region if you cannot get assistance through the main SASSA numbers: SASSA toll-free number: 080 060 1011 SASSA WhatsApp number: +27 82 046 8553 SASSA Eastern Cape: 043 707 6300 SASSA Gauteng: 011 241 8320 SASSA Mpumalanga: 013 754 9446 SASSA Limpopo: 015 291 7509 SASSA North West: 018 388 4006 SASSA Free State: 051 410 8339 SASSA North West: 053 802 4919 SASSA KwaZulu-Natal: 033 846 3324 SASSA Western Cape: 021 469 0235 Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
The Citizen
4 hours ago
- The Citizen
Ramaphosa defends transformation, we must dispense false notion
Ramaphosa said economic growth without transformation entrenches exclusion and transformation without growth is unsustainable. President Cyril Ramaphosa has defended transformation, saying black empowerment is 'vital to inclusive economic growth.' Writing in his weekly newsletter, Ramaphosa emphasised that 2025 marks the 70th anniversary of the Freedom Charter, the country is reminded of its 'aspiration that the people shall share in the country's wealth.' 'Our Constitution reflects the promise we made to one another and to future generations to redress the injustices of our past and realise the full potential of our country. 'For this reason, we reaffirm that broad-based black economic empowerment is not just a policy choice but a constitutional imperative,' Ramaphosa said. ALSO READ: Ramaphosa urges employers to give BEEI youths their 'next opportunity' Inequality The president said that according to Statistics SA, between 2006 and 2023, black African households experienced real income growth of 46%, coloured households of 29% and Indian households of 19%. 'Despite this progress, the average income of white households is still nearly five times higher than that of black African households. This is the gulf we must close through deliberate and sustained efforts to expand opportunity. 'Transformation is not a favour. It is a necessity. The inequality of our past continues to shape the lives of millions of black South Africans. And yet many who continue to benefit from the legacy of exclusion continue to decry black economic empowerment and are even challenging it in our courts,' Ramaphosa said. 'False notion' Ramaphosa said economic growth without transformation entrenches exclusion, and transformation without growth is unsustainable. 'We must dispense with the false notion that we must make a choice between growth and transformation. 'We also need to challenge the notion that broad-based black economic empowerment is a cost to the economy. It is actually an investment in the economy,' Ramaphosa said. Last week, Ramaphosa came out swinging against critics of Black Economic Empowerment (BEE), questioning whether their opposition is rooted in 'greed' or 'jealousy'. ALSO READ: US visit came amid 'increasing strain' between two countries, Ramaphosa says
The Citizen
4 hours ago
- The Citizen
Help create an inclusive SA: SA Guide-Dogs launches 2025 Give a Cane campaign
The SA Guide-Dogs Association is proud to announce the launch of the 2025 Give a Cane campaign, with an even bigger goal in sight. This follows the success of the SA Guide-Dogs Association's inaugural campaign in 2024, which provided 500 white canes to people living with visual impairments. This year, the campaign is calling on South Africans to help raise enough to fund the distribution of at least 1 000 white canes and essential orientation and mobility training. With donations towards a cane starting at just R50, everyone can be part of someone's journey to independence. ALSO READ: SA Guide-Dogs Association seeks puppy raisers to help change lives 'A white cane is so much more than a mobility aid, it's freedom, dignity and the confidence to move through life independently,' said Pieter van Niekerk, spokesperson for the SA Guide-Dogs Association. Why the white cane matters The white cane used by SA Guide-Dogs is not a regular walking stick. It's a specialised mobility tool with a rounded ball tip designed to detect changes in terrain, from sidewalks to tactile paving, and signals to others that the user is visually impaired. This promotes safety, awareness, and inclusion in public spaces. ALSO READ: SA Guide-Dogs Association launches Wear Your Shades campaign Get involved You don't have to walk alone, and you don't have to give big. A R50 donation helps bring someone closer to independence. You can also: • Host a dress-up day, walk-a-thon, or blindfold challenge at work or school • Encourage your book club, community, or running group to chip in • Start a R50 donation challenge at the office • Take part in an online gaming fundraiser • Walk, run, or cycle 50km and get sponsored And if you're a business, don't forget that donations are eligible for Section 18A tax certificates. Donate now or set up your fundraiser at At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading!
