Applying for a personal loan is a simple process that can be done anytime, anywhere.
However, choosing the right loan that’s more affordable and designed for your needs has always been challenging for most people in South Africa.
So we’ve put together the following list of the best personal loan rates in South Africa, to assist you to make a smarter decision before taking your first loan offer.
Table of Contents
Compare Personal Loan Rates
How To Qualify for a Personal Loan?
The requirements for getting a personal loan can vary depending on the lender, but there are some common factors that lenders consider when evaluating a borrower’s eligibility for a personal loan.
They’ll look at your income vs expense from the banking statements of your account. This will ensure you’re permanently employed and earning a salary.
Here are some of the typical requirements:
- Good credit score: One of the most important factors that lenders consider when evaluating a borrower’s eligibility for a personal loan is their credit score. A higher credit score generally indicates a better credit history and a lower risk of defaulting on the loan. While some lenders may offer loans to borrowers with lower credit scores, borrowers with higher credit scores typically have more options and may qualify for lower interest rates.
- Proof of income: Lenders will typically require borrowers to provide proof of income, such as pay stubs, tax returns, or bank statements. This helps the lender evaluate the borrower’s ability to repay the loan.
- Employment history: Lenders may also look at a borrower’s employment history to evaluate their stability and ability to maintain a steady income.
- Debt-to-income ratio: Lenders will also evaluate a borrower’s debt-to-income ratio, which is the amount of debt they have relative to their income. A high debt-to-income ratio may make it more difficult for a borrower to qualify for a loan.
- Personal identification: Borrowers will typically need to provide personal identification, such as a driver’s license or passport, to verify their identity.
- Age: Borrowers must typically be at least 18 years old to qualify for a personal loan.
It’s important to keep in mind that each lender may have slightly different requirements, so it’s a good idea to check with the lender directly to find out what their specific requirements are.
Average Interest Rate in South Africa
Lenders in South Africa can charge loan seekers interest up to 36% based on various factors such as credit score and the type of loan.
With a good over 683 credit score, the banks could offer an average interest rate of 17% – 18% for a personal loan of R300,000. However, for my vehicle finance, I got 8% for an R225,000 value of the car.
As mentioned, this depends on the risk level the credit system identifies you and you can always fix your history for the future.
The better your credit score, the better chance you have to get the most affordable interest for borrowing money.
Personal Loan Prime Lending Rate
The prime lending interest rate in South Africa was 10.25%, which was set by the South African Reserve Bank (SARB).
The prime lending rate is the interest rate that commercial banks charge their most creditworthy customers for loans. It is used as a benchmark for other loans, such as personal loans and home loans, and is influenced by factors such as inflation, economic growth, and the monetary policy of the central bank.
It’s important to note that the prime lending interest rate can change over time, so it’s a good idea to check with the SARB or commercial banks for current rates.
