Report reveals many South Africans are turning to non-bank lenders
· Citizen
More South Africans are turning to non-bank lenders for financial assistance, highlighting growing pressure on households struggling to make ends meet and secure credit through traditional banks.
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This was revealed on Tuesday in the DebtBusters Debt Index for the third quarter of 2026.
Non-bank lenders include retailers, unsecured lenders, microlenders and online lenders. People are increasingly turning to these when they do not qualify for credit from banks or urgently need short-term cash.
More people turn to non-bank lenders
According to the index, banks accounted for 65% of new applicants’ debt during the period. The data is based on information provided by debt counselling applicants.
Non-bank lenders accounted for 15% of new applicants’ debt, the highest in debt index history, according to DebtBusters executive head Benay Sager.
He said the shift reflects more short-term, multi-lender borrowing. In the past quarter, 96% of new debt counselling applicants had a personal loan and a record 64% had a one-month (payday) loan, up from 57% a year ago.
“At 8.8, the average number of credit agreements per applicant is at the highest since the Debt Index began. This indicates the extent of financial pressure consumers are experiencing.”
Money goes to groceries
According to the debt index, the average net income of incoming applicants has grown by 31%, slightly ahead of CPI at 27%. The middle-income bands, the backbone of the country’s working population, have seen almost no change in take-home pay.
Sager highlighted that some cost-of-living expenses have risen faster than inflation, citing a 46% increase in fuel prices since 2021 and a 101% rise in electricity tariffs.
“People taking home between R10 000 and R20 000 a month spend 38% of their disposable income just on groceries. For those earning less than R10 000 net, this rises to 50%, leaving little, if anything, for insurance, savings or emergencies.”
Top earners in trouble
According to the index, the country’s top earners taking home more than R50 000 are under the most strain: debt repayments consume 97% of their take-home pay, and their total debt is 300% of their annual net income, the highest of any income group.
By contrast, lower-income earners’ debt has shrunk by up to 21%; however, this indicates reduced access to credit rather than improved financial health.
The turn in the interest-rate cycle has added to the pressure. After cuts in late 2024 and into 2025, the repo rate has risen to 7.25%.
As a result, credit agreement rates are edging up. Unsecured debt now averages nearly 20% per annum; vehicle finance just over 14%, and home loans 10.6%.
Home loan debt, as a proportion of total debt, rose from 20% in Q2 to 22% and is expected to continue rising if rates keep climbing.
Financial stress
The findings from the index also suggest that financial stress affects South Africans early and later in their lives.
Under-25s now make up 9% of new debt counselling applicants, up 50% from third quarter of 2025 and triple that of 2024. People who are 45 or older make up 29% of applicants.
Sager said although the numbers are concerning, the silver lining is that people are seeking help.
“Although there are aspects that could be improved, debt counselling in South Africa clearly works. In the third quarter of 2026, 15 times as many people successfully earned their clearance certificates as in the same period a decade ago.”