Apply For Your Personal Loan

Looking to apply for a personal loan online? Apply online with CashCrescent and get multiple loan offers from different lenders. Compare the best personal loans in South Africa to find the best option for you.

What You Need to Know About Personal Loans

Understanding how personal loans work in South Africa will help you make a more informed decision.

What is An Unsecured Personal Loan?

Most personal loans from South African lenders are unsecured. When you take out unsecured credit, you won’t need to offer collateral to borrow money. This is compared to secured credit that requires a valuable asset such as your car or home as collateral.

Another difference between secured and unsecured personal loans is that unsecured loans tend to have higher interest rates. The lender’s risk is greater since they can’t collect collateral if you default. So lenders will charge a higher interest rate to lower this risk.

To get a personal loan, you must apply with a suitable credit provider. Once approved, the credit provider pays a lump sum into your bank account, and you agree to pay back the borrowed amount, plus interest. This amount is paid in monthly instalments, over a specific period. Unsecured personal loans typically range from R500 to R250,000 with term lengths of one month to 72 months (6 years).

Longer terms come with smaller monthly payments, but you pay more interest over time. On the other hand, shorter terms have larger monthly payments, but you pay less interest overall.

Best place to get a personal loan

You can get a personal loan from various financial institutions in South Africa including banks, microlenders, and online lenders.

Banks. Banks like FNB and Capitec are large financial institutions that offer services like checking and savings accounts in addition to personal loans. Traditionally, you had to visit a bank’s offices to apply for credit. Today, many banks let you apply and upload your documents online.
Microlenders. Microlenders are usually credit providers that offer small loans (typically below R10,000) to people and businesses that might not otherwise qualify for a personal loan from traditional credit providers. Mashonisa or loan sharks fall under this category. The category also includes finance houses and retailers that offer credit online.
Online lenders. These credit providers are usually 100% online, non-bank companies that use technology to provide personal loans. An online lender generally has no physical locations – you can only apply electronically.

The best place to get a personal loan depends on your financial situation, the interest rate you get, and whether the terms are favourable.

How to Compare the Best Personal Loans

With so many choices for SA personal loans, you might not know where to begin with your personal loan comparison. Find the best personal loan by considering the following factors.

Loan Requirements

The best personal loan deals can only benefit you if you qualify. So lender requirements are usually the first thing to check before applying. Unsecured personal loans have fewer requirements than secured loans since there’s no need for collateral. Additionally, private lenders for personal loans tend to have more flexible requirements than traditional lenders. For example, they may accept bad credit borrowers.

Loan Amount

How much money do you need? One of the benefits of using a comparison service like RandWallet is that you get the best personal loan offers tailored to your financial situation. Some of these offers can be more attractive than others if they offer you the amount you need. Smaller loans usually range from R500 to R8000 while larger loans go up to R250,000 or more.

Interest Rate

One of the most important things to look for with the best personal loans is the interest rate. Lenders make a profit by charging interest, which is calculated as a percentage of the amount. The higher the interest rate, the more your loan will cost. You’ll save more in the long run with the lowest interest rate available, especially if other charges are also minimal.

Fees and Charges

The interest rate is not the only thing to consider when it comes to how much the loan will cost. You have to consider other expenses like the initiation fee and monthly service fee. Lenders can also charge you for early repayment, late repayment, and credit insurance.

Some of these charges can be hidden, so be sure to look at the APR. The APR is calculated as a percentage of the principal and includes the interest rate and fees. The best personal loan lenders will have the lowest APR because the interest rate and fees are both low. However, the lender can still charge upfront fees that are not built into the APR. Find out if this is the case before accepting a quote.

Repayment Terms

The best personal loan options for you also depend on your budget. Some borrowers choose a longer repayment period with smaller repayments. Others prefer a shorter term with larger repayments because they want to save on interest. The most favourable solution for you is one with the shortest term and the most affordable monthly repayment.

Funding Time

It’s common for borrowers to enquire how long it takes to get a personal loan. Most people prefer to get money sooner or later. So, the best personal loan companies usually have a short funding time. Online lenders and non-banks are typically better at this. Some of the best online personal loans on the market can arrive in your account within minutes of approval. In contrast, banks may take up to a week or more to deliver the funds.

Special Features

There are many more factors to consider as you shop around and compare personal loans. Some credit providers offer additional perks that make life easier. For example, you may be able to get an initial quote with only a soft credit check. This won’t affect your credit score. The lender only performs a hard credit check if you accept the offer.

Other special features include no early repayment fees, excellent customer support, flexible rules for acceptable personal loan uses, or payment holidays in cases of financial hardship. Generally, deciding which offer is best for you comes down to a mix of various features. The selection criteria is unique to each borrower, based on which factors matter the most to the individual.

Why Interest Rates Matter

Interest rates matter because they’re the biggest factor affecting the cost of your debt. The table below compares two offers with different interest rates to show how a low interest rate helps you save.

	Offer 1	Offer 2
Amount	R50,000	R50,000
Interest Rate + Fees (APR)	15.25%	20.75%
Monthly Payment	R1,490.40	R1,652.06
Total Interest + Fees	R39,424	49,123.6

As you can see, the offer with the lower interest rate saves you more money in the long run. The second loan offer only costs you nearly an extra R160 per month, but the difference adds up to just under R10,000 over time.

So, even a small percentage change in the rate can result in significant savings, more so with large loan amounts and longer repayment terms. This is money you can use to add more value to your life instead of paying it to the lender. That’s why it’s always worthwhile to research average personal loan interest rates and try to get the best loan options available.

Tips for Getting the Best Personal Loan Rates

The interest rate you get is based on an assessment of your risk profile and payment history. That means you’ll likely get a lower interest rate if you have an excellent or good credit score and a good history of making payments on time.

So, the best personal loan rates in South Africa are reserved for creditworthy borrowers. The risk to the lender is lower since the borrower can be trusted to repay their debt due to their positive, past payment behaviour.

A score of 600+ or 650+ is usually enough to qualify for a low rate. But if you want the lowest personal loan interest rates, you’ll need a score of at least 700. Borrowers with a score of over 750 typically get the best loans and interest rates.

On the other hand, if you have a poor credit score and a record of missed or late payments in your credit history, you’ll likely be offered a higher interest rate. Here are some things you can do to get the best personal loan rates from credit providers.

Improve your credit report. Start by getting a copy of your credit report. Pay outstanding debts as soon as possible so the lender won’t send them to collections or obtain a judgment against you. If you notice any errors and inaccuracies, contact the relevant credit bureaus and dispute them.
Pay off some debts first. Divide your monthly debt payments by your monthly gross income to get your debt-to-income ratio. A lower ratio means you have more room in your budget to afford new credit. So you pose a lower risk to the lender and may qualify for a lower interest rate. If you already have a lot of debt, it’s a good idea to pay it down. Another way to increase your debt-to-income ratio is to increase your income.
Don’t apply for too many loans at once. If you apply for a loan and the lender does a hard credit check, this appears in your report under recent credit activity. If lenders see that you applied for too much credit in a short time, they may think you’re struggling financially. This makes you riskier, and high-risk borrowers are more likely to get a higher interest rate.
Shop around for the best rate. Personal loan interest rates vary by lender. So, the first offer you get may not necessarily be the best. That’s why it’s beneficial to shop around and compare interest rates and fees to find the best deal. Don’t hesitate to negotiate for a discount or lower rate.
Avoid expensive fees. Remember, the goal of searching for the lowest interest rates is to reduce borrowing costs. So, you have to watch out for fees as well. The largest fee is the initiation fee, which is a percentage of the funds deducted before you receive the money. There’s also a monthly service fee. Search for a lender that offers both a low rate and fees.
Maintain a high credit score. That means paying your debts and bills on time, every time. Try to keep the balance on your credit card accounts as low as possible, and check your credit report regularly to ensure all the information is up-to-date. You can use a free or affordable credit monitoring service to help you stay on track.
Shorten your loan term. Another way to save on interest is to choose a shorter loan term. The longer the repayment period, the more risk the lender takes on, so they’re more likely to charge a higher interest rate. Not to mention that you also pay more interest over time. That said, a shorter loan term also means larger monthly payments, so be sure you can afford it first.

Is Taking Out a Personal Loan the Best Option for You?

Taking out a personal loan requires a big commitment that could last for many months or years. This may have a significant impact on your finances in the long term. Before you apply, it helps to weigh the pros and cons of personal loans.

Pros of taking out a personal loan

✔️ Accomplish your goals sooner. One of the biggest advantages of taking out a personal loan is that you can accomplish your goals sooner rather than later. Saving money takes time, but a personal loan offers a lump sum all at once. You then divide the cost into more affordable monthly instalments.

✔️ Low interest rates. Personal loans generally have lower interest rates than payday loans and credit cards. This is especially so for loan applicants with good to excellent credit scores.

✔️ Credit building opportunity. You can use a personal loan to strengthen your credit profile. Making all your monthly payments on time establishes a good track record. This is one factor that has the biggest effect on your credit score.

✔️ Fixed interest rates. Personal loans have fixed rates and monthly payments, so you always know how much you’re paying. On the other hand, some loan types like credit cards may have variable interest rates. That means the interest rate and your monthly payment can change, making it harder to budget.

✔️ Flexible options. Personal loans are quite versatile and can be used for a wide variety of expenses. Similarly, you can choose from a range of loan amounts and terms, depending on your needs. This makes personal loans suitable for all kinds of borrowers.

✔️ No collateral. Unsecured personal loans don’t require collateral, so there’s no risk of losing assets. In addition, the application process for an unsecured loan is quicker and simpler, since you don’t have to go through the process of verifying your collateral.

Cons of taking out a personal loan

❌ No guarantee of low rates or fees. Interest rates for personal loans can be quite high, especially for loan applicants with poor credit. Even if you have an average credit score, there’s no guarantee you’ll get a low rate. Bad credit borrowers may also have to pay expensive fees on top of interest.

❌ More debt on your plate. Taking a personal loan increases your debt and can strain your budget. If you can’t afford to pay off the loan, late payments can damage your credit score and show up in your credit history for years.

A personal loan can be useful if you’re spending the money for a worthwhile purpose and can afford to repay it. Don’t just consider the advantages of taking out a personal loan – also consider your financial circumstances to see if going into debt is the right move.

How Do People Use Personal Loans In South Africa?

As mentioned, personal loans are quite versatile and have many purposes. The good news is that most lenders don’t care what you use the money for, as long as you pay it back as agreed. Here are some common uses of personal loans among South Africans:

Debt consolidation. You can use a personal loan with a lower rate to consolidate high-interest debt and save on interest. A debt consolidation loan also simplifies your finances by combining many loans so you only have a single monthly payment.
Buying a car. Instead of taking out a secured car loan, you can use a personal loan to finance your vehicle. The advantage is there are no restrictions on the type of car you can buy. But keep in mind that personal loans typically come with higher interest rates than traditional car loans.
Home renovations. Renovating a house can be expensive, but a personal loan can get the job done. The right home improvements can have a high return on investment by helping increase the value of your home.
Education costs. Personal loans cover a wide range of educational expenses, including tuition, books, computers, supplies, equipment, professional certifications, training, and other related expenses.
Medical bills. You can also take out a personal loan to finance medical expenses. Even if you have insurance, your insurer might not cover everything and a personal loan helps bridge the gap.
Unexpected expenses. Unexpected expenses like funerals, home repairs, and car breakdowns can happen anytime. If you don’t have enough emergency savings, a personal loan can bring relief and help you manage the situation.
Major life events. Major life events like getting married, moving, or having a baby can create a demand for extra cash. If your budget can’t accommodate this demand, taking a personal loan might help you come out on top.

It’s Best Not to Use Personal Loans for These Reasons

While you can use a personal loan for almost anything, that doesn’t mean you should. The key is to use them to improve your financial health. Unsecured personal loans have higher interest rates than secured loans, and things can get quite expensive if not used properly.

For example, it’s probably not practical to use a personal loan to pay for an expensive, fancy holiday or a big, extravagant wedding. Similarly, it’s not advisable to use loans to raise your standards of living or finance an expensive lifestyle. This will increase your debt payments and may eventually trap you in a vicious debt cycle.

In a nutshell, it’s best NOT to take out a personal loan for the following reasons:

You can’t afford it. Taking out a loan you can’t afford can have long-term consequences and be extremely damaging to your credit score and finances. Be sure that you can comfortably afford a personal loan before applying.
It’s not necessary. It’s nice to have extra money, but keep in mind that a loan is not for free. You’ll owe interest on the entire amount. So, ask yourself if you really, really need it and if the answer is no, you’re better off going without. We recommend that you only borrow the amount you need and not a cent more.
It’s not worth it. For example, it’s not worth taking out a personal loan only to spend it all on a single event like your graduation party. You may enjoy yourself for a day, but end up paying for it for years.
You can afford to wait. If you can afford to wait, then go ahead and start saving. Find ways to increase your income and reduce expenses to speed up the process.

How to Apply for a Personal Loan Online

The best personal loans should have a convenient application process. Fortunately, many banks and non-banks offer easy personal loans you can apply for in the comfort of wherever you are. Here are the steps to take when applying for an online personal loan.

Gather Documents and Information

The personal loan application process requires you to provide information and documents, so the lender can verify your identity and income. It’s best to get everything together before you apply to ensure an efficient application.

So, what do you need to apply for a personal loan online? Requirements vary between lenders, but generally, you need to provide the following:

Personal details – your full name, date of birth, ID number, etc.
Contact details – your address, email, and cellphone number
Employment details – job title, employer’s contact information, etc.
Financial details – monthly expenses and existing debt
Loan details – desired amount, repayment period, and purpose of the loan
Bank details – you should have a working South African bank account
Proof of identity – a valid South African ID document
Proof of income – latest 3 payslips and/or bank statements

💡Pro tip: It’s also important to review your credit report at this stage. Your credit score determines whether your application gets approved and what rate you get. Get a free credit report from Transunion or Experian and fix any errors affecting your score.

Also pay down your debts to reduce your debt to income ratio. Even if there’s nothing you can do to change your score, checking your report may give you a good idea of what kind of loan and rate you qualify for.

Shop for the Best Lender

There may be many banks and private lenders for personal loans, but not all are right for you. Take the time to shop around and compare the best personal loan companies. The best personal loan deals for you should match your needs and preferences.

For example, if your credit score is not as good, look for lenders specializing in personal loans for bad credit. Or if you need money in a hurry, make sure you can get quick funding. When choosing a credit provider, here are the top qualities to look for:

Registered credit provider. Always confirm you’re dealing with a licensed credit provider registered with the National Credit Regulator (NCR). Unregistered lenders often run scams and engage in predatory practices like charging extremely high interest rates.
Transparent about fees. Good lenders are transparent about how much they charge instead of tacking on hidden charges. They disclose the interest rate and fees, so you know exactly what you’re getting into.
Responsible lending. Responsible lenders always perform credit checks and affordability assessments. If a lender is advertising no credit check loans with guaranteed approval, there’s always the risk of taking out a loan you can’t afford.
Excellent customer service. Taking out a loan should be simple and straightforward. A good lender should provide all the essential information, including instructions and FAQs. They should also use appropriate technology to ensure an efficient and user-friendly application process.

Compare Loan Offers

Take the time to find a loan that’s just right for you by using a personal loan comparison site. If you submit an application via a loan broker, you’ll likely get multiple offers, which you can compare easily in one place.

Overall, the best personal loan options should have the following features:

The lowest interest rate and fees (APR)
The right loan amount that meets your needs
Monthly payments that fit your budget

Once you identify a suitable loan offer, fill in the entire online application form. Don’t leave any gaps, and double-check to ensure all your information is correct. The next step is waiting for the lender’s response. Some of the best lenders will give you an immediate response, while some take days.

💡 Pro Tip: Use Our Personal Loan Calculator. If you’re looking for the best online personal loans in South Africa, you can benefit from using our personal loan repayment calculator. It’s simple and easy to use.

Choose your loan amount and term using the sliders, then scroll down to compare offers from different lenders. Keep in mind that the monthly repayments are only estimates. They may differ from the final offer, based on your credit score and risk profile.

Finalize Your Application

Once you receive a lending decision and an offer, it’s up to you whether to accept or decline. Remember, you have no obligation to accept a loan offer. If you agree to the terms and conditions, the next step is finalizing your loan paperwork.

You’re usually asked to upload your payslips and bank statements. Some lenders use an easier, electronic income verification process where they obtain bank statements directly from your bank.

Once all that is done, you’ll receive loan documents to sign electronically. Read through the documents thoroughly and understand everything before signing.

Wait for Loan Funding

How long does it take to get a personal loan? Funds usually hit your account as a lump sum soon after you’re approved. Some credit providers offer same-day funding and transfer the money within minutes or hours of approval.

Delays can occur if it’s a holiday or if you finalize your application outside business hours. You likely won’t receive the exact amount you borrowed because lenders usually deduct an upfront charge to process the loan. For example, if you borrow R50,000, the lender may deduct an initiation fee of R1,207.50.

You can use the money as you see fit. But interest starts accumulating as soon as you receive funds, and you have to repay the loan according to the terms established in the loan agreement.

What Happens If Your Personal Loan Application Is Not Approved?

A declined loan application can be disheartening, but the first important step is to find out why you’re not approved. Once you find the reason, it’s possible to fix it and ensure it doesn’t happen again in the future. Here are some common reasons why your application for a personal loan was rejected.

Your Credit Score Is Too Low

A credit check may reveal that you don’t have enough credit history or have negative listings, such as late payments and judgements. You also can’t qualify for a loan in South Africa if you’re a debt review client. If your credit score is too low, lenders regard you as a high-risk borrower and less trustworthy, so your application will be denied.

How to fix it: In the short term, consider shopping around for a lender that caters to bad credit borrowers. But keep in mind that even if you do qualify, you’ll likely get a higher interest rate than someone with a better score.

In the long term, work on improving your credit history and credit score by making on-time payments, keeping your credit balances low, paying off some debt, and avoiding too many hard credit checks. Check your credit report to look for any errors affecting your score and dispute them.

Your Debt-to-income Ratio Is Too High

It’s important to apply for a loan you can afford. That’s why credit providers look at your debt to income ratio (DTI). This ratio measures your total monthly income against all your existing debts. To determine your DTI, divide all your loan payments by your gross monthly income.

For example, if your total loan payments amount to R3,000, and you have a gross monthly income of R5,000, then your DTI is 60%. Ideally, you need a DTI below 40%. The lower the ratio, the higher your chances of getting approved.

How to fix it: The only way to fix this is to look for ways to increase your income or pay off some of your debts.

You Didn’t Pass the Affordability Assessment

Before they approve your application, the lender wants to know whether you’re able to pay back the loan in full and on time. If you have an insufficient or unreliable income, they may decide you can’t afford the monthly payments and decline your application. In addition, if the loan amount is too high or unreasonable, they may reject your application entirely.

How to fix it: Find a credit provider that publishes their minimum income requirements. For example, some providers are upfront about only wanting loan applicants who earn a minimum monthly income of R3000. If you qualify, you can apply with more confidence.

In addition, choose a realistic and sensible loan amount that matches your budget. The rule of thumb is to choose a loan amount not more than eight times your salary.

Incorrect or Incomplete Loan Application

An incomplete or incorrect loan application form usually meets with automatic rejection. If you’re not careful, it’s easy to make a mistake when filling in your application form. Some borrowers are not entirely honest when giving out information, but credit providers have verification processes in place to identify this.

The lender won’t be able to make an informed decision on whether or not you qualify if you’re not forthcoming with the required details or fail to include important information or documents in your application.

How to fix it: The good news is that most credit providers allow you to apply again, usually after 30 days. Be sure to proofread your application and correct errors before submitting it. Make sure that you upload the correct documents as required.

Your Loan Purpose Is Not Approved

Some lenders have restrictions or limits on how the money should be used. For example, many providers may not want loan applicants to use the money to start a business. That’s probably because this is a high-risk venture that could leave you struggling financially if the business fails. Your application will be declined if the lender believes you may be unable to make repayments.

How to fix it: Read the fine print thoroughly to verify that your loan purpose matches the lender’s criteria.

You Didn’t Meet Basic Application Requirements

Other factors can affect your loan approval. For starters, you need to meet basic requirements, such as having a valid SA ID or working bank account, email address, and phone number.

You must also be the age of majority (18 years). Some credit providers also want you to have a sufficient employment history. It’s common for credit providers to require that you to have worked for your current employer for at least three or six months.

How to fix it: Look at the lender’s basic requirements and make sure you qualify before applying.