Personal loan surge as living costs climb, despite drop in civil debt cases

The number and value of civil debt cases in South Africa have declined, according to the latest data from Statistics South Africa for May. Yet, figures for the first three months of the year from DebtBusters show a record number of consumers are relying on personal loans to cope with rising living costs.

Statistics South Africa reported that the total number of civil summonses issued for debt fell by 17.1% in the three months ended May 2025 compared with the same period in 2024. The agency attributed the drop in part to a decrease in money lent and debt for goods sold.

Similarly, the total number of civil judgements recorded for debt declined by 19.7% over the same period. Statistics South Africa said this was due to less money being lent and fewer defaults on rent.

The total value of civil judgements recorded for debt decreased by 8%, which the agency linked to smaller amounts owed from money lent and fewer written promises to pay a stated sum to a specific person.

Despite these declines, DebtBusters’ quarterly index for the first quarter of 2025 found that people are still under financial strain as more consumers than ever are turning to personal loans to cover shortfalls between income and the rising cost of living. The index noted that while consumer confidence has improved and the rollout of the ‘two-pot’ retirement system has provided some relief, financial strain remains.

According to DebtBusters, 91% of consumers who applied for debt counselling in the first quarter had a personal loan – the highest on record. An additional 37% had a one-month or payday loan.

“It’s clear that while consumers may feel a little more positive, personal loans, especially one-month loans, remain a lifeline for many, because income has not kept pace with rising expenses,” said Benay Sager, executive head of DebtBusters.

The debt counselling company stated that electricity tariffs have risen 135% over the past nine years, petrol prices have increased by 88%, and the compound effect of inflation stands at 52%. As a result, consumers who applied for debt counselling in the first quarter required an average of 69% of their take-home pay to service debt, the highest level since 2017.

The most financially strained group, earning R5,000 or less per month, used 76% of their income to repay debt. Higher earners, taking home R35,000 or more, spent 77% on debt repayments. DebtBusters said these are the highest ratios recorded since it began analysing the data in 2016.

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