Middle-income earners feel the pressure of car loans the most.
South Africans’ debt levels continue to rise, with more people turning to debt counselling. DebtBusters’ Debt Index for Q4 2025 reveal that despite lower interest rates, vehicle and unsecured debt continue to exert significant pressure on finances.
The index released on Wednesday notes that there has been some positive development going into 2026 that boosted people’s financial confidence, but most people still rely on loans to make ends meet.
Benay Sager, executive head of DebtBusters, has attributed the continued reliance on loans due to increasing expenses that have significantly outpaced income growth through the past decade.
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Car debt remains high
Sager said the financial relief of successive interest rate reductions has helped some, however, car debt continues to exert significant financial pressure on consumers.
“Overall, there was increased demand from consumers for debt management, with online debt management subscriptions up by 41%, compared to the same period last year,” he said.
“We anticipate increased demand for the rest of 2026 as these factors continue to play out against a set of regulatory price increases, such as electricity and municipal rates.”
He also highlighted that people’s financial confidence may have improved in 2025, income growth is still significantly behind expense growth.
Negotiating car debt
Sager added that many people might go into debt counselling because it reduces unsecured debt and can negotiate car debt to more manageable levels.
The index showed that the nature of debt varies for each income group. Higher income earners have a larger proportion of secured debt, but middle-income earners feel the pressure of vehicle loans the most.
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According to the index, the majority of those earning between R10 000 to R20 000 have at least 25% of their salary going towards car financing, while 11% goes towards home loans.
Those earning above R35 000 have 24% of their salary going to car financing and 37% to home loans.
Car financing becomes a bigger problem
The index highlighted that the mix of lenders hasn’t really changed, but car loans are becoming a bigger problem.
“Banks make up 67% of credit (more so with affiliates); there is an increase in solely secured lending compared to a few years ago, driven mainly by increase in vehicle debt,” reads the report.
The index, which is in its tenth year this year, revealed that people who applied for debt counselling in Q4 2025 needed 71% of their take-home pay to service their debt; the highest level recorded since 2017.
“A record 96% of these consumers had a personal loan, and 59% had a one-month (payday) loan – another record. This indicates that personal loans, especially one-month loans, continue to be a vital lifeline as consumers supplement their income with short-term unsecured credit,” reads the report.
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