Personal loans hit record high in South Africa as cost of living bites

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A growing number of South Africans are turning to personal and payday loans to stay afloat, as the rising cost of living continues to outpace stagnant incomes.

A new report from DebtBusters reveals that a staggering 91% of individuals applying for debt counselling in early 2025 had at least one personal loan – the highest percentage ever recorded.

Alarming debt pressures

DebtBusters’ head, Benay Sager, warned that this trend signals a deepening financial crisis, especially among middle- and upper-income earners who are now under increasing pressure.

“Basically, eight out of every 10 rands earned by top-income earners applying for debt counselling are being spent on debt repayments,” Sager said.

“That’s the highest we’ve ever seen. It reflects the severe financial strain facing even those who are traditionally better off.”

Although some indicators – like consumer confidence – have shown slight improvement, the financial burden remains immense.

Essentials such as electricity, fuel, and food have seen sharp price hikes, while household incomes have remained virtually flat.

Debt spike among high earners

One of the report’s most surprising findings is that debt is growing fastest among the country’s highest earners.

Traditionally seen as more financially resilient, this group is now increasingly reliant on borrowing to maintain their lifestyles or cover basic expenses.

“This group is under severe pressure,” Sager emphasised.

“The fact that such a high-income bracket is so leveraged shows how widespread the impact of the cost-of-living crisis has become.”

A warning sign for the economy

The report paints a sobering picture of South Africa’s economic health.

With many households resorting to short-term borrowing at high interest rates, financial experts warn that without interventions – such as improved wage growth, energy cost control, and inflation relief – more South Africans could be pushed into unsustainable debt cycles.

Takeaway

As debt becomes the only option for many South Africans to survive rising costs, financial advisors are urging consumers to prioritise budgeting, seek professional debt advice early, and avoid high-risk lending solutions where possible.