South African Credit Trends in Q1 2026

What the Report Shows

TransUnion’s South Africa Industry Insights Report for the first quarter of 2026 paints a picture of a credit market that is still active but split into two clear sides.

Banks Tighten Up

• Traditional banks are being more careful about who they lend to.
• Personal loans from banks grew only 2.5 % year‑on‑year, while the number of active accounts rose 1.4 %.
• Loans to people with lower credit scores dropped 3.8 %, showing banks are avoiding riskier borrowers.
• Despite lending less to high‑risk customers, banks saw their personal‑loan default rate fall sharply—down 256 basis points to 26.7 %.
• Younger borrowers are still appearing: Generation Z made up 23 % of bank personal loans, up from 19.5 % the previous year.

Non‑Bank Lenders Loosen Up

• Companies outside the traditional banking system are expanding fast.
• Personal loan originations jumped 19 % and active accounts rose 27.6 %.
• More than half (53 %) of these new loans went to Generation Z borrowers.
• Average loan sizes are getting smaller, suggesting people are taking out quick, short‑term cash to cover immediate needs.
• The downside: delinquencies on these loans climbed 193 basis points to 49.8 %, meaning almost half of the accounts are seriously behind on payments.

Who’s Borrowing?

Generation Z Takes the Lead

• Both banks and non‑bank lenders are seeing a bigger share of their loans go to teens and young adults.
• Non‑bank lenders, in particular, are relying heavily on this group, which raises concerns about their ability to repay as living costs rise.

Credit Cards: More Use, More Risk

• Fewer new credit cards were issued (‑9.5 %) and average credit limits fell (‑4.1 %).
• Yet, existing card holders are using their cards more—outstanding balances rose 8.8 %.
• Delinquencies also increased, with account‑level delinquencies up 66 basis points to 13.6 %.
• Hatea notes that cards are serving as a quick‑cash tool while also highlighting growing financial pressure, especially linked to rising crime‑related expenses.

Cars on Finance: New Models, Higher Risk

• Auto‑loan originations grew 11.6 % year‑on‑year.
• Generation Z and Millennials together accounted for 66 % of new car financing.
• The market is shifting toward brand‑new vehicles, with cheaper Chinese makes now representing one in five sales.
• Lending to subprime borrowers (those with weaker credit) surged 33.5 %, now making up a quarter of all new car loans.
• Despite the riskier mix, repayments improved—account‑level delinquencies fell 80 basis points to 7.1 %.

Homes and Retail: Mixed Signals

• Mortgage balances rose 3.3 % to R1.29 trillion, but the number of home‑loan customers fell. Growth came from larger loan sizes, not more people buying houses.
• Retail clothing accounts grew to 18.5 million active accounts, with balances up 6.4 %, though arrears crept up slightly—showing everyday purchases are getting harder to pay off.
• Retail installment lending became concentrated among fewer borrowers, accompanied by a sharp rise in defaults.
• Retail revolving credit (store cards, etc.) shrank in both accounts and balances, but repayment performance improved, indicating lenders are pulling back from riskier shoppers.

Why It Matters for Teens

• Short‑term loans and credit cards are easy to access but can become costly if payments are missed.
• Generation Z is borrowing more than ever, especially from non‑bank lenders that charge higher rates.
• Understanding the difference between a bank loan (usually safer, lower rates) and a short‑term loan (quick cash, higher risk) helps you make smarter money choices.
• Keeping an eye on your spending, setting a budget, and paying off balances on time can prevent debt from snowballing.

Conclusion

The first‑quarter 2026 data shows a South African credit market pulling in two directions. Banks are pulling back, lending more cautiously and seeing better repayment results. Meanwhile, non‑bank lenders and some retail credit providers are opening the door wider for younger, financially stretched consumers—offering fast cash but at a higher risk of missed payments.

For teens stepping into the world of credit, the takeaway is clear: borrow only what you can afford to repay, understand the costs, and keep track of due dates. By staying informed and cautious, you can use credit as a helpful tool without falling into a debt trap.