Personal loans can be a lifesaver, but they're often misunderstood. Myths you’ve heard about credit scores, high interest rates, and family liability can leave you hesitant to apply.

We’ve separated fact from fiction on 5 common beliefs:

1. Personal loans ruin your credit score – myth!

When you apply for a personal loan, the lender needs to do a credit check on your credit profile before they can process your application. You’ll notice that the check may cause a dip in your credit score. However, this drop is only temporary. In fact, if you pay your full instalment on time every month and prove that you’re a responsible borrower, a personal loan can improve your credit score in the future. Did you know you can try out our credit score tool for free and it will not impact your credit checks or leave any footprint? 

2. Creditors can make surviving family members pay off your loan – myth!

This is one of the most common misconceptions about debt – that if you pass away, the creditor can claim the debt from your next of kin. It’s not true. Debt is tied to the individual who borrowed the money, not their family members. Therefore, it can’t be inherited. If you pass away, your estate will become responsible for settling any outstanding debt that you have.

Creditors will not be able to demand that your family make any repayments unless they have co-signed the loan agreement or provided surety for it. Your estate will have to pay off your remaining debt – however, that could reduce the amount left for your loved ones. That’s why it’s important to have a will and to structure your estate to cover any liabilities. Life insurance and credit life cover give you extra peace of mind, because they can settle all your debt and still leave enough in your estate to support your family.

3. Applying for a personal loan is difficult – myth!

Applying for a Nedbank personal loan is quick and painless.

• To apply, you need to be a South African resident between the ages of 18 and 65.
•  You must have a minimum salary or income of at least R5,000, which is paid into your bank account electronically.
• You can apply if you’re self-employed, you have a permanent or fixed-term contract, or you’re a pensioner – provided that your net income is at least R5,000 a month.

You can apply through the following channels:

• Nedbank website
• Money app
• Online Banking

Or ask us to call you.

You’ll need the following:

• Your South African ID.
• Your most recent payslip, or a letter from your employer if you are on contract, or proof of your pension payment if you’ve retired.
• Depending on where you bank, you may also need stamped bank statements for the past 3 months – see the personal loan page for details.

4. You can’t apply for a personal loan if you have a bond – myth!

The fact that you’re already paying off a home loan doesn’t mean that you can’t apply for a personal loan. Banks assess each loan application on its own merits, considering factors like your credit score, income, and how much you can afford. If you can pay all the monthly instalments comfortably, having a bond or any other debt is not an issue.

In fact, many people with a bond use a personal loan to pay for smaller home-related expenses that aren’t covered by their home loan, like moving company costs, travel for the move, registration fees, transfer duty or even attorney fees. You might also take out a personal loan for home improvements further down the line.

5. Personal loans have very high interest rates – myth!

While it’s true that personal loans often have higher interest rates than secured loans (like a home loan or vehicle finance), they’re not always excessive. The interest rate you’re offered depends on a combination of factors like the repo rate, your credit score, your income, and the loan amount. 

Having a good credit score means that you can secure a competitive rate with fixed repayment terms, so you’ll know exactly how much you’ll be paying each month. Your repayment amount will automatically adjust with repo rate changes. Personal loans also offer flexibility, making them an affordable option for short- to medium-term goals when used responsibly.

And to give your loan even more value, Nedbank offers you R200 cashback every month* throughout your loan term if you take out a personal loan with a MiGoals Plus or MiGoals Premium account.  

* Read the full terms and conditions.

Learn more about applying for a Nedbank personal loan.

Terms and conditions apply.