Debt consolidation can be a game-changer if you’re overwhelmed by multiple monthly payments and rising financial pressure. With consumer debt sitting at R2.5 trillion and the debt-to-income ratio at critical levels, many South Africans feel the weight of their financial obligations. By September 2024, 28.2 million people held credit across 96 million accounts, with a third having impaired credit records.
They did nine years ago, mainly because salaries haven’t kept pace. As a result, expenses such as credit card bills, personal loans, medical bills, and everyday expenses continue to rise. South Africans now have 42% less purchasing power than they did nine years ago, primarily because salaries haven’t kept up with inflation. Managing multiple payments—credit cards, personal loans, medical bills, store accounts—can be overwhelming and financially draining.
If you’re feeling buried in debt, you’re not alone; more importantly, you’re not stuck. A legal and structured solution exists to bring back control: a debt consolidation loan in South Africa.
What is Debt Consolidation?
Debt consolidation allows you to combine multiple debts into a single new loan. You then use this single loan to pay off your current balances, leaving you with just one monthly repayment to manage.
This approach simplifies your financial life. Instead of juggling multiple payment dates and interest rates, you track just one. With fewer moving parts, planning your budget, staying consistent, and feeling more in control becomes easier.
If you have a good credit profile, you may also qualify for a lower interest rate than what you currently pay across your various debts. Over time, that can save you money. Constant payments on the new loan can help you rebuild your credit score.
How Debt Consolidation Works in South Africa
Here’s what the general process of debt consolidation works:
- List your current debts, including amounts owed, interest rates, and minimum payments.
- Compare loan offers from different providers, taking into account the interest rate, loan term, and any additional fees.
- You can apply with supporting documents, such as proof of income and your current debt statements.
- Once approved, your lender pays off your outstanding debts directly.
- You then repay the new loan in one manageable monthly installment.
Things to Consider
A debt consolidation in South Africa can work if:
- You qualify for a better interest rate than what you’re currently paying.
- You commit to not taking on any new debt while paying off the consolidated loan.
However, if your credit score is poor or you lack affordability, you might not qualify or be offered a high interest rate. And if your debt is already unmanageable—even with a single payment—this may not be the best option.
One of the biggest challenges we see is that many people only start looking into debt consolidation when it’s already too late. By then, they’re often overwhelmed by multiple missed payments, legal threats, or are heavily over-indebted. Others delay taking action because they underestimate the seriousness of their debt, fear judgment, or don’t know where to start. The longer you wait, the fewer options you may have
In that case, could you consider debt counselling instead? Under South African law, debt counselling can protect you from legal action by creditors while restructuring your repayments into an affordable monthly amount.
We’re Here to Help
clearly explain your options, including whether debt consolidation or debt counselling is the most suitable approach
Take the first step by completing our free online assessment. We’re here to help you make a smart move toward financial freedom.