The timing of a loan application can influence how much it costs to borrow. In October 2025, interest rates are lower, inflation is stable, and banks are offering credit in a relatively predictable environment. With the repo rate at 7 per cent and the prime lending rate at 10.50 per cent, many South Africans are weighing whether to apply now or wait for possible changes later in the year. Knowing the current conditions and the main factors that affect approval can help you decide if October is the right time to take out a loan.
Key Takeaways
- October Borrowing Conditions: With the repo rate at 7 per cent and the prime lending rate at 10.50 per cent, October offers relatively stable borrowing conditions, supported by low inflation and the possibility of further interest rate cuts.
- Loan Approval Factors: Banks assess affordability using debt-to-income ratios, credit history, and risk profiles. Different lenders may offer varying interest rates and loan amounts, so comparing options is essential.
- Managing Repayments: Missing a repayment can harm your credit score, but banks are often willing to restructure loans or negotiate payment arrangements if contacted early.
What Is a Loan?
A loan is an amount of money provided by a financial institution to cover either planned or unexpected expenses. The person receiving the loan, known as the borrower, must repay the full amount together with interest within an agreed time frame. Loans are offered in different forms to meet various financial purposes. A bank may approve a loan as either secured or unsecured. A secured loan usually involves a larger amount and is linked to an asset, such as a house or a car, making it suitable for home loans or vehicle finance. An unsecured loan, on the other hand, generally covers smaller amounts and is more commonly associated with personal loans or student loans, where no asset is used as collateral.
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Types of Loans
Banks make a range of loan products available to meet different customer needs.
Home Loan: A bank advances funds for the purchase of a property, with the house itself serving as security until the final repayment is made. Borrowers repay the loan in monthly instalments at an agreed interest rate over a set term, usually around 20 years.
Student Loan: For students requiring assistance to pursue studies at a higher education institution, banks provide funding for tuition and related costs. The loan is repaid after studies are completed, with relatively low interest rates and flexible repayment arrangements often applied.
Car Loan: Banks extend financing for both new and pre-owned vehicles. Repayments are made monthly, and ownership of the car only transfers fully to the borrower once the last instalment has been settled.
Personal Loan: Personal loans are designed to cover a wide variety of individual financial needs. The amount available depends on the lender’s policies, the applicant’s financial profile, and their ability to meet the repayment obligations.
Business Loan: A business loan supplies the funding needed to launch or expand a business. Repayment terms are set by agreement with the bank, and conditions differ depending on the institution. Whether the applicant is starting a new venture or managing an existing operation has a significant influence on the approval process.
Should South Africans Borrow in October?
With the repo rate recently reduced to 7 per cent in August 2025 and the prime lending rate adjusted to 10.50 per cent, October may be a practical time for borrowers to consider taking on credit. These conditions create a more predictable lending environment for those weighing up financial decisions.
Why October Could Be a Good Time to Borrow
- Borrowing costs remain low and steady, which makes it easier to plan and budget for future repayments.
- Analysts believe that interest rates may continue to ease before the end of the year, creating opportunities for more affordable credit. This stability reduces the likelihood of being caught off guard by sudden increases.
- Inflation has stayed below the Reserve Bank’s target band in recent months, at about 2.8 per cent. This gives policymakers room to continue supporting borrowers with lower lending rates.
Reasons to Consider Waiting
- Some forecasts indicate that the Reserve Bank could choose to hold rates at current levels until there is stronger proof that inflation is consistently contained. This means that the pace of further reductions might slow.
- If your personal finances are expected to improve soon, such as through a higher income, an improved credit record, or reduced debt, delaying your application may help you qualify for better loan terms and lower monthly instalments.
What To Do When Applying For A Loan
| What To Do When Applying For A Loan | Explanation |
|---|---|
| Check Your Credit Report | Your loan request will be declined straight away if your credit report shows that you are under debt review. Many people do not realise that a debt review flag can appear on their profile without their knowledge. |
| Check Your Affordability | The National Credit Regulator (NCR) requires lenders to only provide credit if they are confident you have the ability to repay it. Each bank applies its own calculations when deciding whether you can handle loan repayments. Affordability is normally judged by considering several aspects, such as: • Debt-To-Income Ratio: This is the income left over after settling all existing debt and covering everyday living costs. • Risk Profile: Your past behaviour with credit is examined. Lenders will look at whether you have been paying your accounts regularly and on time. Missed or late payments lower your credit score and reduce your chances of approval. It should also be understood that South Africa has multiple credit bureaus, and each bureau may provide a slightly different score. There is no single bureau that can be considered completely accurate. However, many people rely on the information supplied by long-established credit agencies such as TransUnion and Experian. Since every bank uses its own methods, the outcome can vary. This explains why when you approach different banks for a home loan, the offers you receive may differ in: interest rates linked to the loan amount, the maximum loan they are prepared to give. |
| Approved Amounts Versus Real Affordability | Being approved for a certain figure does not guarantee that you can actually manage it. Underestimating monthly expenses, such as groceries or transport, can leave you short when repayment time arrives. Providing false expense figures does not change the reality of your budget. Always be truthful with yourself and the lender. A practical approach is to apply for a loan slightly lower than the maximum you qualify for. This leaves space to handle changes such as a higher repo rate, which increases monthly instalments. When signing a loan contract, you commit to the repayment structure. This includes the monthly instalment, the interest charged, and the total repayment period. |
| Keep Up With Current Debt Payments | Paying your existing debt on time each month improves your credit score and shows lenders that you are reliable with credit agreements. |
| Reduce Or Settle Outstanding Debt | Since affordability is measured partly by how well you manage current credit, lowering your overall debt increases your disposable income. This can also make you eligible for a larger loan. |
| Consider A Co-Signer | Some lenders allow you to apply with a co-signer. If the co-signer has a stronger credit record and better affordability, it can improve your chances of being approved. |
| Have A Stable Income | Lenders assess your employment record to confirm how long you have earned a consistent income. Proof of steady earnings, whether through employment or self-employment, is vital to show that you can manage future loan instalments. |
| Maintain A Credit History | Having no debt at all can be as problematic as having too much. Without any credit agreements, lenders cannot see evidence of how you manage repayments. This lack of history makes it difficult for them to judge if you will pay back a new loan reliably. |
What Happens If You Cannot Pay the Loan?
One of the most serious financial setbacks a person can face is missing a repayment on a loan or credit agreement. Circumstances beyond your control may arise, leaving you unable to meet your obligations on time. The most important step is to contact your bank as soon as you realise that you may struggle to make an instalment. In many cases, the bank can assist by extending the payment date, offering a short payment holiday, or agreeing to let you settle the instalment a few days later.
Lenders may also restructure your loan by lengthening the repayment term. This approach lowers the monthly instalment, which can make it more affordable in the short term. However, you should be aware that it results in paying more interest over the life of the loan. Still, having an instalment that fits into your budget can prevent missed payments, which would otherwise harm your credit score. By informing your bank early, you also reduce the stress of constant follow-ups and calls from debt collectors.
Banks generally prefer negotiating a solution rather than immediately pursuing legal action. If you are transparent about your financial situation and agree on a plan to catch up with late or missed payments, you are far more likely to receive their cooperation. This proactive approach helps you protect your credit record and manage your financial obligations more effectively.
Conclusion
For South Africans considering borrowing, October 2025 provides a stable environment with relatively low interest rates and controlled inflation, making it a potentially suitable time to take out a loan. However, each borrower’s personal financial position remains the key factor. Evaluating affordability, checking your credit profile, and being realistic about repayment commitments are vital before entering into any loan agreement. Whether choosing a home loan, personal loan, or other credit product, responsible borrowing and open communication with lenders will help ensure that repayments are manageable and your credit record remains protected.
Frequently Asked Questions
Is October a good month to apply for a loan in South Africa?
Yes, October may be a suitable month for many borrowers since interest rates are currently low and relatively steady. With inflation remaining under control, the lending environment is predictable, which can help with budgeting and repayment planning.
Will all banks offer the same loan terms in October?
No, loan terms can differ widely between banks because each institution uses its own assessment methods. This means that the interest rate you are offered, the size of the loan you qualify for, and the repayment period can vary. Comparing several offers gives you the chance to choose the option that suits your financial needs best.
What should I check before applying for a loan?
It is important to look at your credit report to ensure there are no errors or debt review flags, assess your affordability by reviewing income and expenses, and confirm that your monthly budget can comfortably handle a new instalment. Lenders will also check your history of managing credit, so being prepared strengthens your application.
What happens if I miss a repayment?
Missing a repayment can damage your credit score and may make it more difficult to access credit in the future. If you realise you cannot make a payment, contacting your bank straight away is the best course of action. Many lenders will be willing to assist by offering options such as extending the payment date, granting a short payment holiday, or restructuring the loan to make it easier to manage.
Should I borrow the maximum amount I qualify for?
Not necessarily. While approval for a higher loan amount may look appealing, it does not always mean it is realistic for your budget. Borrowing slightly less than the maximum provides breathing room in case of unexpected costs or changes, such as a higher repo rate that increases instalments. This approach makes it easier to stay on track with repayments.
