Illegal loan warning for South Africans

The Credit Association of South Africa (CASA) has warned consumers to only accept credit from lenders that are registered with the National Credit Regulator.

The association flagged an increase in South Africans turning to the illegal market for credit, which is often associated with exorbitant interest rates and illicit tactics such as withholding identification documents.

CASA CEO Leonie van Pletzen recently told Newzroom Afrika that during times of heightened financial strain, particularly following the festive season, many South Africans are seeking access to credit.

She cautioned consumers to avoid accepting credit from the illegal market, which includes any credit providers not registered with the National Credit Regulator.

Van Pletzen explained that illegal credit providers will often charge exorbitant interest rates and, in some cases, withhold consumers’ cards and IDs, prohibiting them from accessing legal and formal credit.

She said this has become a major concern for CASA, which represents the largest non-banking credit providers in South Africa.

Illegal credit providers do not comply with the regulations required by the National Credit Regulator, leading to exorbitant interest rates as high as 100% per month.

In addition, some resort to extreme measures such as taking and keeping consumers’ IDs and cards, keeping them trapped in a debt loop when they are unable to repay these exploitative loans.

To address this problem, Van Pletzen emphasised the role of financial literacy, calling for more education on legal forms of credit.

In addition, she acknowledged that many consumers turn to illegal tenders of credit because of financial strain and an inability to repay or access formal credit.

“What I want to tell consumers is, if you are struggling to repay your credit providers, don’t disappear,” she said. 

“The best advice that I can give you is to speak to your credit provider, because usually our credit providers that are regulated with the National Credit Regulator are there for the consumers.” 

“They will make a payment arrangement. Just don’t disappear, because as soon as you stop paying, it will definitely negatively influence your credit record.”

She also advised consumers not merely to turn to credit to meet an immediate need, but rather to plan ahead and consider how the credit can work for you, rather than against.

“Credit is not something that you should be ashamed of. It can really work in your favour,” she said. “And if you make use of the right credit provider, that credit provider can guide you.”

Expanding access to credit

Over the past few years, South Africa has seen a significant expansion in access to credit, as non-bank lenders have grown their share of the market.

FNB’s Economics Weekly, released at the start of December 2025, showed that retailers are issuing credit at a far faster rate than South Africa’s traditional banks.

It should be noted that banks continue to dominate the local credit market, holding 78.6% market share.

Banks issued R122.7 billion of the total R156.1 billion new credit issued in the third quarter of 2025. This marks an 11% year-on-year increase.

However, retailers recorded the fastest growth, with new credit issued up 24% year-on-year, nearly double that of banks, to reach R12.2 billion.

This lifted retailers’ share of the market to 7.8%, which FNB said reflects the rising popularity of in-store credit, driven by discretionary and durable goods purchases.

FNB’s statistics further showed that other alternative credit issuers also saw strong growth. For example, non-bank vehicle financiers expanded significantly by 16.5% year-on-year to R11.5 billion.

These trends come as non-bank lenders, particularly retailers, are increasingly looking to grow their share of the local credit market and expand into the financial services sector.

Major retailers like Shoprite and Pepkor have also thrown their hats in the ring, growing and launching their own banking offerings.