Here’s what to do before you take on a loan this year
For many South Africans, borrowing remains an essential part of daily life. But January often brings added pressure. Back-to-school costs, festive season debt, and the familiar ‘Januworry’can stretch household budgets to the limit. As this pressure marks the start of 2026, taking on credit requires more careful planning and consideration than ever before.
Responsible borrowing isn’t about avoiding loans altogether, it’s about making well-informed choices. It’s means understanding the trade-offs, choosing the right type of credit for your needs, and knowing what support is available if things don’t go as planned. Before taking out a loan this year, here are key considerations every consumer should keep in mind.
- Start with the reason
While it’s important to compare interest rates and repayment terms, it’s equally important to be clear on why you need the loan. Is it addressing a genuine need, supporting long-term wealth creation, or simply easing short-term pressure while creating long-term challenges?
“Credit should serve a productive purpose,” says MJ Davis, CEO of FNB Retail Loans. “Clear reasons for borrowing make it easier to choose the right product and avoid unnecessary strain later. Lenders also pay attention to why credit is used. Borrowing for clearly defined and planned needs sends a very different signal relative to borrowing repeatedly to get through the month.”
- Do a realistic affordability check
A loan isn’t free money. It’s a monthly commitment that you must be able to live with for months, sometimes years. “Without properly checking what you can afford, a loan can quickly become a problem instead of a solution,” explains Davis. Affordability should be based on what you take home each month after deductions, with fixed expenses like housing, transport, food, and insurance assessed first, followed by variable costs like water, electricity, airtime, data, and so on.
- Understand borrowing costs
Low monthly repayments don’t always mean a cheaper loan. Consumers should look at the full cost of credit, including interest, initiation fees, service fees, and credit insurance. Using tools like loan calculators allows customers to compare scenarios and see how changes in term length or interest rates affect the total amount repaid over time.
- Check your credit behaviour
Your credit record determines how easily and affordably you can borrow, now and in the future. Checking your credit status before applying helps you see what lenders see and avoid costly surprises. Credit bureaus and financial institutions track borrowing patterns over time. And, while taking on more credit may give short-term relief, repeated borrowing can make future credit harder and more expensive to access. “Your credit behaviour tells a story over time,” cautions Davis. Applying for multiple loans in a short period can negatively affect your credit score and may signal financial pressure and repayment risk, even if repayments are up to date,” adds Davis.
- Don’t fall for offers that sound too good to be true
Offers that rush you into borrowing are a red flag. Legitimate lenders give customers time to read agreements, ask questions, and compare options. Taking a beat and seeking guidance from a trusted financial institution can help avoid decisions that worsen your financial position. The same applies to third parties who approach in moments of financial stress, pushing you into drastic solutions, such as debt review, without fully explaining the long-term implications or exploring less severe alternatives first. “No one should feel pressured into debt or a debt relief solution they don’t fully understand,” Davis emphasises. “Financial decisions should be made with clarity, not fear or urgency.”
- Speak up before you fall behind
Many consumers fear the thought of the bank contacting them about their debt, often avoiding contact with their banks out of dread. But FNB Retail Collections executive head Patricia Temba, explains that understanding the collections process upfront is part of responsible borrowing. “Financial pressures arise unexpectedly and addressing them early can make a difference,” she says. “If you’re struggling, talking to us early allows us to support you, explore workable solutions, and help prevent long-term damage to your credit record.”
January can make magnify the need to borrow urgently, but rushed decisions often have lasting effects. Taking time to think and choose credit that truly fits your life can be an act of self-protection. “Responsible borrowing isn’t about denying yourself help. It’s about giving yourself the best chance to recover and move forward without carrying unnecessary financial stress into the rest of the year,” Davis concludes.
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