Debt consolidation loans in South Africa: when they save money and when they do not

A consolidation loan is one new loan whose money pays off several existing debts, such as a credit card, a store account and a personal loan. You then repay one lender in one instalment. You can compare personal loan offers by amount and term on the online loans list.

It is a new debt: the old accounts are paid off, not written off, and the new loan adds its own initiation and service fees. It also differs from debt review, where a registered debt counsellor negotiates new terms with your creditors; with a consolidation loan you borrow from a lender and pay the creditors yourself. Nobody reduces what you owe: the same debt is spread over one agreement.

Whether a lender lends for consolidation is its own product decision. None of the five lender cards on our list mentions consolidation as a purpose (checked 19 Oct 2026), so check the product page and ask for a quotation.

Several repayments a month? Compare personal loan offers and ask each provider for its pre-agreement quotation.

The debts below are an illustration, not anyone’s offer: a credit card of R8 000 at 24% a year, a store account of R7 000 at 25% and a personal loan of R5 000 at 21%, R20 000 in total. Each is repaid in equal monthly instalments over 12 months. The new loan is R20 000 plus the maximum initiation fee of R1 050 (R165 plus 10% of the amount above R1 000, never more than R1 050, before VAT), with a service fee of R69 a month as Century publishes it.

No lender on our list publishes a rate for a loan this size, so the new loan is priced at the legal ceiling for unsecured credit: the repo rate plus 21 percentage points, 28.25% a year with the repo rate at 7.25% since 25 Sep 2026 (regulation 42; see our repo rate page). That is the most a registered lender may charge. Your quotation can be lower. Calculated 19 Oct 2026, interest on the reducing balance, indicative sums.

VAT on the initiation fee adds about R158 to the new loan. Over 36 months the instalment drops from about R1 887 to about R943, and you repay about R11 284 more in total. If your old debts already cost less than the new loan, even a 12-month consolidation costs more than doing nothing. At 18.25% a year, a rate 10 points lower and for illustration only, the 36-month loan would cost about R833 a month and about R29 975 in total.

Consolidation saves money when your old debts cost more than the new loan, for example short-term loans at up to 5% a month, and the term stays short.

For smaller debts, Finbond Mutual Bank lends R500 to R25 000 over up to 24 months (its personal credit page, 28 Oct 2026). It does not publish a rate, so compare its quotation with the 28.25% ceiling used above.

The service fee in the example is the one Century publishes (18 Oct 2026). Try your own debts in the loan calculator.

Not every lender accepts consolidation as the purpose of a loan. Check the product page of each provider and ask for a quotation before you apply.

The online lenders on our list lend up to R8 000, repaid within days or months. For debts above that you need a longer, larger loan, which on our list only comparison services quote. They do not lend: they send your request to partner lenders. As listed on 30 Oct 2026: Arcadia Finance R100 to R350 000 over 6 to 72 months, rates from 11% to 28%; Creditum R500 to R350 000 over 6 to 72 months; Crezu (as listed on 19 Oct 2026) R500 to R350 000 over 61 to 120 days.

What to compare: the interest rate per year, the initiation and service fees, the instalment and the total you repay. More on how to read an offer in our personal loans guide.

Banks lend for consolidation too. African Bank’s consolidation loan lets you combine up to 5 loans into 1, with a fixed interest rate and repayment terms from 18 to 72 months, and says no settlement quotes are required, only proof that your loans were settled (africanbank.co.za, 28 Oct 2026). The rate is not on the page, so ask for a quotation.

See amounts, terms and rates side by side on the online loans list. The provider decides after its own checks.

Debt review is a process under the National Credit Act (section 86): you apply to a registered debt counsellor, who assesses whether you are over-indebted and, if you are, proposes new terms to your creditors. A consolidation loan is a product you buy. The two do not mix easily.

From the day you file an application for debt review, section 88 says you must not enter into any further credit agreement, other than a consolidation agreement, until one of the events listed in the section occurs, for example the counsellor rejects the application or you fulfil the re-arranged obligations. A lender that gives you new credit while a re-arrangement is in place may find that agreement declared reckless. So a new loan during debt review is not a simple yes, and the exception for a “consolidation agreement” is something to ask your debt counsellor about before you sign anything. When you can borrow again, and how to spot offers aimed at people in review, is in loans under debt review.

Debt review is recorded on your credit file, until a clearance certificate is issued; ask the credit bureau or the NCR how long the entry stays. The counsellor’s fee depends on the counsellor; ask before you apply. We publish no figure.

Not sure what your file shows? Read how to check your credit score. If you are not in debt review and your debts are manageable, compare loans on the loans list.

• The term gets longer. A lower instalment over more months costs more in total, as the table shows. “Reduce your repayments” is not “reduce your debt”.
• The new loan adds fees. An initiation fee of up to R1 050 plus VAT and a monthly service fee come on top of interest.
• Your old debts may be cheap. A card or a store account at a lower rate than the new loan is better left alone.
• Secured debts need care. Vehicle and home finance have their own early settlement terms and security. Ask each creditor for a settlement figure before you decide.
• The cards stay open. If you pay off a card and use it again, you carry the new loan and the new card balance.

Run the numbers on your own debts with the loan calculator: enter the amount, the annual rate from your quotation and the term, and add the initiation fee in the fee field.

If your credit score is low (the bands are in what is a good credit score) and consolidation does not fit, see loans for a low credit score: what lenders say about your record.

1. Read the pre-agreement statement and quotation (section 92): rate, every fee, instalment and the total you will repay.
2. Compare that total with what you would pay on the old debts, in rand.
3. Ask for settlement figures from each creditor you plan to pay off; you have the right to settle an agreement early (section 125).
4. Check whether credit life insurance is optional and what it adds to the instalment.
5. Pay the old creditors yourself, keep the settlement letters and decide what happens to cards and store accounts.
6. Check the lender in the NCR register of credit providers by company name or registration number.

Be wary of “debt relief” offers that ask for money upfront, promise to “clear your debt” or say you will be “debt free” by a date. A registered credit provider quotes a price before you pay anything, and a debt counsellor must be registered with the NCR.

Ready to compare? Start on the online loans list and apply on the provider’s website. The lender decides after its own checks.