Best personal loans in South Africa: Compare lenders and interest rates

A loan can help you meet your financial obligations, but do you know which type of loan is best for you?

In this guide, we explore personal loans, how they work, what to expect when you apply for one, and common myths and misconceptions. We also compare various banks’ personal loan offerings.

Tip: Get a personal loan of up to R350,000 through Sanlam, a trusted JustMoney partner.

How do personal loans work?  

A personal loan is a form of credit that allows you to borrow a specific amount of money from a credit provider or financial institution and repay it – with interest – over a set period, in monthly instalments.

These loans can provide quick cash in emergencies, enable you to cover expenses such as medical bills or school fees, support life goals such as higher education, or be used for debt consolidation.

Personal loans are usually unsecured, which means you don’t have to provide assets such as a house or car as security. Because these loans are not backed by an asset, they’re riskier to lenders, so interest rates tend to be higher than for secured loans.

If you have a good credit score, you may qualify for a lower interest rate than someone with a poor credit score, so make sure you understand your credit score and how to improve it.

Uses for personal loans

There are a number of different uses for a personal loan.

Such loans are often used to help cover medical costs, car or home repairs, moving home, funeral expenses, or to respond to an emergency.

You can also use a personal loan to consolidate debt. A debt consolidation loan is used to combine multiple debts into one to simplify your monthly repayments. To qualify, you must prove you can manage the new repayment amount.  

How to apply for a personal loan

When applying for a personal loan, it’s essential to follow the right steps to improve your chances of approval.

Here’s what you need to do.

1. Choose a registered lender

Only apply with a trusted, registered lender. Check if a credit provider is registered with the National Credit Regulator (NCR) to make sure they’re legitimate and avoid scams or predatory lenders.

2. Gather your documents

To apply, you’ll need:

• A valid South African ID 
• Your latest payslip to prove your income
• Three months’ bank statements to verify your financial stability
• Some lenders may require additional documents, especially if you’re self-employed or a foreign national applying for a loan in South Africa.

The specific requirements of various credit providers are listed below, in the section “Where to apply for a personal loan”.

3. Check your credit score

Lenders use your credit score to decide whether you qualify for a loan and to determine the interest rate they’ll offer you.

A higher score usually translates into better loan terms, so it pays to maintain a good credit score.

Credit bureaus allow you one free credit check a year. The four main credit bureaus in South Africa are Experian, TransUnion, VeriCred Credit Bureau (VCCB), and Xpert Decision Systems (XDS).

Your credit score may differ between bureaus. Make sure you inform yourself about your score and the steps you can take to improve it. A good credit score can open doors to a range of financial opportunities.

4. Check the eligibility requirements

Before you apply for a personal loan, make sure you meet the lender’s basic criteria:

• You need to be at least 18 years old
• You must have a regular, verifiable income
• Ideally, you must be a South African citizen or permanent resident (foreign nationals may be able to obtain loans, but lending criteria are stricter)

Your application will be rejected if you don’t meet the lender’s loan eligibility requirements.

5. Submit your loan application

If you’re eligible for a loan, you can apply in different ways.

• Online. Most banks and lenders allow you to apply quickly and easily on their websites.
• In person. If your lender is a bank, visit a bank branch with your documents and apply directly.
• Via your bank’s mobile app. App-based applications are quick and convenient. 

6. Wait for approval

The lender will review your application, check your credit score, and assess your ability to afford the loan.

If approved, you’ll receive a loan offer that sets out the amount, interest rate, fees, repayment terms, and more.

7. Accept the offer and receive your funds

Read the loan agreement carefully and ensure you understand the terms and conditions, and whether there are any hidden fees or penalties.

Once you sign the loan agreement, the lender will transfer the funds to your bank account – often within 24 to 48 hours.

Where to apply for a personal loan 

You can apply for a personal loan from several lenders, each offering distinct benefits.

We’ve listed some options below to help you compare. All fees were correct at the time of writing.

Absa

What you need to apply

• Your South African ID document or card
• Your last three months’ payslips or bank statements
• Non-Absa customers will also need proof of residence, such as a municipal account not over three months old

How to apply

• Visit www.absa.co.za/personal/loans/for-myself/personal-loan and click “Apply now”
• Contact 0860 100 372 to enquire
• Visit an Absa branch

African Bank 

What you need to apply

• Your South African ID document or smart card
• Your most recent proof of income, for example, a payslip
• Your last three months’ bank statements or payslips
• Non-African Bank customers require proof of residence – for example, a municipal or rates bill not older than three months

How to apply

• Existing African Bank clients can apply online at www.africanbank.co.za/en/home/product-personal-loan
• Call 0860 333 004
• Visit an African Bank branch
• Apply online and email your documents by following the links provided. Check the progress of your loan application by calling 0861 111 011

Capfin 

 What you need to apply

• Your South African ID document or smart card
• Your last three months’ payslips or bank statements

How to apply

• Apply online at www.capfin.co.za/apply-now/application-details 
• Apply via SMS to 33005
• Visit any PEP or Ackermans store, where staff will assist you
• Call 087 354 0000 or WhatsApp 066 000 0683

Capitec Bank 

What you need to apply

• Your South African ID document or smart card
• Your last three months’ payslips or bank statements showing three consecutive salary deposits, if not paid into your Capitec account
• Capitec accepts self-employed applicants and those with multiple income streams, but you must choose “self-employed” as employment type when applying online

How to apply

• Visit www.capitecbank.co.za/personal/credit/personal-loan or apply on the Capitec app
• Call Capitec direct lending on 0860 66 77 89
• Visit a Capitec branch

First National Bank (FNB)

 What you need to apply

• Your South African ID document or smart card
• Proof of residence not older than three months
• A stable income, paid into your FNB account for at least three months
• If your income changes, you may be required to submit proof of income for the previous three months
• If you’re a non-FNB customer, you will also need a South African Revenue Service (SARS) notice of assessment (ITA34), and three months’ bank statements if you’re self-employed

How to apply

• Visit www.fnb.co.za/loans/personal-loan.html and click “Apply now”
• Apply via the FNB app
• Call 087 335 8630 for personal loan applications
• Visit an FNB branch

Nedbank 

 What you need to apply

• Your South African ID document or smart card
• Your most recent salary slip, or a letter from your employer if you’re on contract
• Your last three months’ payslips or bank statements

How to apply

• Existing Nedbank clients can visit https://personal.nedbank.co.za/borrow/personal-loans.html or use the Nedbank Money app
• Call Nedbank Personal Loans on 0860 103 582
• Visit a Nedbank branch

Sanlam 

 What you need to apply

• Your South African ID document or smart card
• Recent proof of your residential address
• Your last three months’ payslips or bank statements, or original bank-generated PDF statements as proof of income

How to apply

• Online at www.sanlamonline.co.za/personal/credit-solutions/personal-loans
• Call 0860 726 526
• Apply for a Sanlam-backed personal loan on the JustMoney platform

Standard Bank 

What you need to apply

• Your South African ID document or smart card
• Your last three months’ payslips or bank statements, or six months’ payslips if you’re self-employed
• Proof of residence, for example, a utility bill not older than three months
• Three months’ bank statements, if you’re not a Standard Bank account holder
• A SARS notice of assessment (ITA34) certificate, if you’re not an existing Standard Bank customer

How to apply

• Visit the Standard Bank loan page and click “Apply now”
• Via the Standard Bank app, by clicking on “Borrow” once your profile is set up
• Call personal banking on 0860 123 000
• Visit a Standard Bank branch

Which bank offers the best personal loan interest rate?

Personal loan Interest rates are based on several factors, including the repo and prime lending rates, your credit score, the type of loan you’re applying for, the amount you’re hoping to borrow, and affordability.

Generally, rates are personalised – but they may not exceed the maximum rate stipulated by the National Credit Act.

Many lenders will try to beat their competitors, so it’s worth contacting a few providers to compare their offerings and secure the lowest-interest personal loan. Do be aware, however, that multiple loan enquiries can make you seem credit dependent, and impact your credit score negatively. Check the table below to compare.

What makes a loan affordable?

An affordable personal loan is one that you can repay without financial strain. Here are some factors that help make a loan affordable.

• A low interest rate. The lower the interest rate, the less you pay overall. Rates can range from around 10% to 27%, on average, based on your credit score and the lender in question. Shop around, as there may be alternatives to a loan with a high interest rate (anything above 20%).
• A manageable monthly instalment. If your total debt repayments exceed 30% of your monthly net income, you’re in the danger zone. Don’t take out a personal loan, if it will tip you over this point.
• A reasonable loan term. A longer term means lower monthly repayments, but more interest over time. Personal loan terms can vary from 12 to 84 months. Shorter loan terms are always preferable, if you can afford the instalments. 
• No hidden fees. Look for a loan with transparent fees, including initiation and monthly service fees, and early-settlement charges if applicable. Ask your loan provider for more information if you’re unsure.

Understanding personal loan requirements helps you make an informed choice before applying.

Alternatives to personal loans 

If a personal loan isn’t right for you, there are other options to consider.

These may include:

• An overdraft. This is a credit limit linked to your bank account that lets you borrow money when your balance is low or depleted. It’s good for short-term needs.
• A credit card. A credit card allows you to borrow money to pay for purchases. It works via major payment networks worldwide, such as Visa, Mastercard, and American Express.
• An employee or salary advance. Your employer may agree to advance part of your salary or wages before payday. The amount you borrow will be deducted from your next salary. It’s different from a loan since it’s regarded as an early part-payment of your salary. 
• A payday loan. This is a short-term, unsecured loan taken out against your income, which must be repaid (in part or in full) by your next payday. Payday loans have a bad reputation as fees and interest rates can be high. They can also be abused, and may be offered by unscrupulous lenders.  

Personal loan tips

Is a personal loan the right solution for you?

Ask yourself:

• Do I really need a loan? Perhaps you can consider another option, such as a side hustle, or selling unwanted items. Never borrow for luxuries or holidays. 
• Will I qualify? Use a loan calculator to check how much you can afford. However, don’t apply for different loans with multiple lenders, as this could harm your credit score. 
• Can I get the amount I need? Borrow only what you need, since extra credit may come with higher costs.  
• How much will it cost? Work out the total repayment, including interest and fees. Make sure you can afford this before committing to the loan.
• Which lender is best? Compare interest rates and loan terms. If you plan to repay early, check for penalties – some lenders charge fees for early settlement. 

Common myths about personal loans

There are lots of misconceptions about personal loans. Here, we bust some common myths.

• Personal loans are only for emergencies. False! You can use them for home improvement, starting a business, consolidating your debt, or any purpose that meets your needs. Be clear about why you want the loan and understand what your financial obligations will be.
• Personal loans always have high interest rates. Not always. They may be cheaper than credit cards, for example – and the rate partly depends on your credit score. 
• You need a perfect credit score to get a loan. Not true. Some lenders will extend loans to people with lower credit scores, but the terms will vary.
• Applying for a loan will ruin your credit score. False. One loan application won’t hurt, but applying for many loans at once is a red flag and can lower your score. 

Tips for managing monthly repayments

Here are some tips for savvy money management:

• Avoid unregistered lenders. They can lead you into financial trouble. Check for registered credit providers on the National Credit Regulator’s website.
• Borrow wisely. Don’t commit to more than you can afford to repay.
• Budget for payments. Remember to include interest and fees.
• Pay on time. This protects your credit score and keeps you out of financial trouble. 
• Pay extra if you can. This will help you reduce your debt faster.
• Set up automatic payments. Debit orders help you avoid missing due dates.
• Ask for help if needed. If you have trouble paying, talk to your lender, who may offer a new repayment plan.

The importance of maintaining a good credit score

Having a good credit score means you can be trusted to repay a loan. This opens doors to financial opportunities, such as buying a home, acquiring an education, or starting a business.

A good credit score can also help you save money by enabling you to secure better loan terms. Who doesn’t like having extra cash in their pocket?

If your credit score is low, however, you can take steps to improve it by:

• Paying your instalments on time and in full
• Limiting your credit use to avoid high-interest debt
• Monitoring your credit report to check for errors or potential fraud
• If you use a personal loan wisely, it can help improve your credit score over time.

If you’re considering using credit to help you achieve your financial goals, a personal loan offering personalised interest rates and affordable instalments could be the solution you’re after.

Tip: If you need financial support for unexpected expenses, you can apply for up to R50,000 from Capfin. Apply today.