Common Reasons Why Loans Are Rejected in SA

Personal loans can help to pay for those big purchases or can provide relief in an emergency. You can also use a personal loan to consolidate your debt, so that you have just one lower monthly payment. 

Many of us have probably applied for a personal loan at some point, but not everyone is successful in getting one. 

One of the main reasons for this is because the consumer is over indebted according to the executive head of online comparison website,, Vera Nagtegaal. She went on to say that credit providers have a responsibility to ensure that applicants can pay back the loan and don’t end up in a spiralling debt pit. 

South Africans have over R1.7 trillion of consumer debt and in an attempt to try and diminish this, president Cyril Ramaphosa signed the National Credit Amendment Bill that could write off the debt of millions of South Africans. 

The controversial legislation aims to give debt relief to those that earn up to R7500 per month and have up to R50 000 of unsecured debt. Debt relief is provided by suspending part or all of the debt. 

However, Nagtegaal pointed out that whilst those that qualify could have their slate wiped clean, it shows on their credit record. This could then affect their approval chances for any loans in the future. A financial institution will not lend money if there is a chance that it can’t be paid back. 

When financial institutions are considering issuing a loan there are some key factors they look at. 

Employment Status

Your application will only be considered by many providers if you have a permanent job and have been working in your place of employment for 6 months or more. 

Others just need you to have a steady income, but if your income history is irregular then a lender might be reluctant to provide you with a loan. 

Bank Account

You will need to have a South African bank account where your salary is paid into directly each month. If you are paid weekly or fortnightly then you can still apply for a loan, but you may need to submit your four latest payslips with your application. 


When providers look at your financial position they check to see if you can afford to repay the loan. Your affordability is based on your income, your expenses and any other debt you may have. If they find that you will not be able to pay the loan, then you will be rejected.

Credit Score

A key component to determine whether you will be approved for a loan is your credit score and payment history. If these are bad then you will most likely be rejected. Your credit score is based on the kind of debt you have, your payment history and debt usage. You will have a low credit score if you have missed payments, have multiple defaults or judgements on your account. 

Under Debt Review or Blacklisted

Once you have been blacklisted or are under debt review then you will not be able to get any credit or you will have a very hard time getting credit.

You can only apply for a loan that is for yourself and you are not allowed to apply for a loan on behalf of another person. 

If you are already carrying a lot of credit, then credit providers will deem you too risky and you will most likely not be approved for a loan. 

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