Asking “What interest rate can I get on a personal loan?” is common for many South Africans planning major expenses, consolidating debts, or funding short-term needs. Rates fluctuate depending on your credit score, loan amount, and lender policies. This guide explores the current personal loan landscape in South Africa, explains what factors affect interest rates, and suggests strategies to secure a better deal.
Overview of Personal Loan Rates in 2025
Leading banks and lenders are currently offering annual interest from approximately 18% to 29%, depending on the borrower’s profile . For example, Nedbank advertises an average range of 18.25% to 28.25% Nedbank Personal Banking, while Old Mutual caps their products at 29.25% per annum Old Mutual.
These rates are calculated on various terms—typically 12 to 72 months—and aim to accommodate different financial needs and repayment abilities. As interest rates drop, some borrowers may benefit from lower rental costs or reduced monthly instalments.
How National Rates Influence Loan Interest
South Africa’s prime lending rate, currently at 10.75% following the May 29, 2025 Repo rate cut, significantly influences personal loan interest levels. Lenders build their personal loan offerings by adding a margin above this prime rate, ensuring rates align with overall market conditions.
What Determines Your Personal Loan Rate?
1. Credit Score
Your record with credit bureaus is a major indicator. A score above 600 typically qualifies for lower interest. Poor scores may lead to higher rates or refusals.
2. Income and Employment
Borrowers with stable, reliable income—such as long-term salaried employees—are more likely to receive better interest offers.
3. Loan Amount and Duration
Smaller, shorter-term loans often carry lower interest. Lenders may offer better rates on R20,000 over 12 months than on larger amounts or longer periods.
4. Loan Type
Some providers include insurance or service fees within the rate. Others separate costs, affecting the effective annual rate.
Typical Interest Rates by Lender Type
Major Banks
- Nedbank: 18.25%–28.25%
- Old Mutual: up to 29.25%
- Capitec (term loan): 12.75%–28.25% based on amount and term
Online and Micro-Lenders
Fintech platforms may offer fast access but rates often remain in the high teens or low twenties.
Comparing Interest Offers
When comparing personal loan rates, look beyond the percentage:
- Monthly repayment – Calculate using an online calculator or lender’s tool.
- Total repayment – Includes interest, initiation fees, insurance, and service charges.
- Repayment flexibility – Early settlement options or penalty-free structures offer flexibility.
A lender quoting 18% may still result in higher total cost if their fees outweigh a 22% offer from a competitor.
Tips to Get Better Rates
1. Improve Your Credit Score
Pay debts on time, reduce outstanding balances, and regularly check your credit report.
2. Choose the Right Loan Amount
Borrow only what you need. A smaller loan often attracts better interest terms.
3. Secure a Co-Signer
A guarantor with good credit can reduce perceived risk and lower your interest rate.
4. Opt for Shorter Terms
Loans repaid over 12–24 months typically cost less than those extended over 60 months.
5. Negotiate with Lenders
If your profile is strong—steady income and clean credit—ask if they can offer their lowest available rate.
Why Borrowers Should Compare Offers
Each bank or lender sets rates based on risk profile, internal costs, and competition. Some offer lower base rates but higher initiation fees, while others bundle insurance into the repayment. Comparing effectively means:
- Checking interest percentage
- Quantifying all fees
- Comparing repayment terms and total cost
How Broader Rate Cuts Help Borrowers
The downward trend in the prime rate since September 2024 (from 11.75% to 10.75%) makes new borrowing more affordable. Existing borrowers with fixed interest may not benefit until their loan resets, but prime-linked loan applicants directly feel the reduced cost of borrowing.
Choosing the Right Loan Option
| Scenario | Best Option |
| Small short-term need | Bank term loan with low rate |
| Large purchase or consolidation planned | Longer loan with fixed-rate may be better |
| Poor credit score | Consider co-signer or micro-lender |
| Prefer low monthly payments | Longer term with budgeting caution advised |
Responsible Borrowing Practices
Before deciding:
- Borrow what you can afford.
- Use affordability calculators.
- Ensure repayment won’t burden your monthly finances.
- Read loan documents carefully.
- Plan early settlement only if it won’t incur penalties.
