Secured versus unsecured credit
Secured credit is cheaper because the lender can recover from an asset if you default. That is the whole of the difference, and it explains both why the rate is lower and why the stakes are higher.
A home loan runs at single-digit annual rates because the property secures it. Short-term unsecured credit is capped at 5% a month because nothing does.
The trade is real. Converting unsecured debt into secured debt — consolidating credit card balances into a home loan, for instance — lowers the rate and moves the risk to your house. A default that would have meant a bureau listing now means losing the property.
Be especially careful about pledging an asset for a small amount. Handing over a vehicle worth R80 000 to secure R15 000 puts a large asset behind a small debt.
For most short-term needs, unsecured credit is the appropriate instrument despite the higher rate — the amounts are small, the term is short, and no asset is at stake.
Related
Sources and last checked
- National Credit Act 34 of 2005 and its regulations — Government, as at 10 August 2026.
Page last checked 10 August 2026. Statutory caps and lender terms change — confirm anything you intend to rely on with the provider or the National Credit Regulator. Found something wrong? Tell us and we will correct it.