South African households are increasingly turning to personal loans as a means of dealing with escalating living costs, according to the latest DebtBusters debt index for the first quarter of 2025. The report reveals a troubling trend: one in three South Africans finds themselves unable to keep up with debt repayments, with a staggering 91% of those seeking debt counselling reliant on personal loans.
Benay Sager, Chief Operations Officer at DebtBusters, expressed profound concern over these alarming figures. “The challenge is that the costs come up and grow, and consumers feel the need to supplement them with additional sources of income,” he explained. “The first port of call seems to be going for a loan, particularly personal loans. It shouldn’t have come to this stage, especially for younger people.”
The data released by DebtBusters indicates that the incidence of financial distress is at its highest level since 2017, marking nearly a decade since such significant figures have been recorded. Sager emphasised the critical need to address this financial crisis, especially among the youth, stating, “We really want to catch them earlier on and give them the right advice.”
This surge in personal loan dependency is indicative of a broader economic challenge in South Africa, where rising inflation and a stagnant economy have pressured households to make difficult financial decisions. Many individuals find themselves trapped in a cycle of borrowing, further complicating their financial health.
As the cost of living continues to climb, financial experts warn that more South Africans may increasingly find themselves in dire financial situations. The consequences of this trend can have lasting repercussions on credit ratings and overall economic well-being.
Given these circumstances, DebtBusters urges consumers to seek financial advice before resorting to loans. The organisation aims to provide support and guidance to those struggling with debt, encouraging an early intervention approach to prevent financial crises from escalating.
