When would I need a loan?

All credit comes at a cost and it's important to understand that the interest and administration fees will add up to significantly more than the amount you initially borrowed. Credit should be taken for necessities or things that will pay for themselves - not the things you simply want. If you can live without the purchase then it's better to put off buying it until you have the cash - otherwise you'll end up paying for more for it. 

So, when is a loan a good idea? Have you ever had that week where you need an emergency root canal for your aching tooth, your geyser has burst and your car won’t start? If you don’t have medical aid, home and car insurance or an emergency cash fund then you’re in a bit of a fix. A personal loan can help as long as the loan amount is consistent with the emergency costs. It needs to be affordable too – ensure you can repay those monthly premiums as it is not a good idea to skip any.

Debt Consolidation Loan

Another valid reason to take out a loan in South Africa is to consolidate your debt - that is to bundle all your debt into a single loan. This is not to be confused with debt review or sequestration. With debt consolidation, all your existing credit accounts are paid off and the collective debt is consolidated in a new debt consolidation loan. This is a good strategy if you are struggling to make minimum repayments on various credit accounts (for example, store accounts, credit cards, payday loans) as it allows you to lower your monthly instalments and helps avoid defaulting on payments. The lower monthly instalment is usuall the result of a longer loan term, which ultimately increases the cost of debt. Debt consolidation is an option that is there to assist you in dealing with your debt.

Why do I need a loan?

A loan is useful if you need something and you don't have the cash on hand to buy it. Things like cars cost quite a bit of money. A loan enables you to purchase the car and pay it off over a certain time period.

A root canal: R4 000
A new geyser: R3 000
A new car battery: R1 000

How much money do I need?

Only ever take as much as you really need. Let's look at some of the more common emergencies such as the need for a root canal
(R4 000), new geyser (R3 000) and a car battery (R1 000). If you needed all three at the same time, you could be looking at a cost of around R8 000.

Once you know how much you need, you should choose a repayment period. Paying your loan off over a shorter period will reduce the cost of the loan, but shorting the payment period will also increase your monthly instalments.

This is how much you can expect to pay over different time periods if you took a loan of R8 000 (this excludes fees and credit life costs):

  • 3 months: R2 700 / month
  • 6 months: R1 400 / month
  • 12 months: R750 / month

Use our free online loan calculator to get an estimate of how much it would cost for a personal or debt consolidation loan amount that you can pay off over time - up to 60 months.

Your credit score can be the deciding factor between you getting or not getting a loan you've applied for. You are entitled to one free credit report per year.

Why Old Mutual?

Old Mutual Finance strives to provide you with personal and debt consolidation loans tailored to your needs.

We're one of the most trusted names in financial services in the country.

We're accessible online and through our 300 branches nationwide.


young lady peering into a car window
How does vehicle finance work?
young entrepreneur in front of a computer
Small business ideas to run part-time

Other financial needs you may want to consider:

Saving and Investing
For the future or something special
Learn more
Saving for your children's education
Learn more
Securing your future financially
Learn more
Life Cover and Insurance
Life insurance that offers peace of mind
Learn more
Funeral Cover
Covering unforeseen funeral costs
Learn more
Personal loans, debt consolidation
Learn more
Low-cost banking accounts
Learn more
Personalised disability & severe illness cover
Learn more
Short Term Insurance
Affordable car, home & valuables insurance
Learn more