Loan Affordability in 2026: How to Pre-Check Yourself

In a year marked by economic uncertainty and cautious consumer sentiment, understanding loan affordability isn’t just smart, it’s essential. Before applying for any form of credit in 2026, taking the time to pre-check your affordability can help you avoid over-indebtedness, secure better loan terms and borrow responsibly.

In South Africa, credit providers are legally required to assess whether borrowers can afford repayments before granting credit, and consumers benefit from knowing what these assessments involve so they can prepare their finances accordingly.

Just before we get into the details, remember that you can get a completely free credit check done through RCS itself by navigating here.

What ‘affordability’ really means in South Africa

Under the National Credit Act (NCA), credit providers must ensure consumers have the financial means and prospects to repay a loan before agreeing to lend money. This requirement is part of responsible lending practices designed to protect consumers and stop reckless lending, where credit is granted even though the consumer cannot reasonably afford it.

An affordability assessment typically looks at:

• Income -  total earnings before and after deductions

• Expenses - necessary living costs and other financial commitments

• Debt repayments - current and future obligations

• Discretionary income - the money left over after all expenses and debt repayments are accounted for

This helps credit providers determine whether monthly loan repayments will fit within your financial capacity without causing financial stress or over-commitment.

Why pre-checking affordability matters in 2026

Rising costs of living, inflationary pressures and shifting interest rates have made financial planning more important than ever. Knowing your affordability before you apply for credit gives you the confidence to:

1. Avoid over-borrowing: You’re less likely to take on more debt than you can repay.

2. Manage monthly budgets better: Understanding your financial limits helps you plan repayments without affecting daily living costs.

3. Negotiate smarter: You can approach credit providers with a clearer view of what you can realistically afford.

Preparing ahead also helps you avoid unnecessary credit applications, which can negatively impact your credit profile if they’re unsuccessful.

Step-by-step: How to pre-check your affordability

Here’s a practical guide to assessing your financial health before you apply for a loan:

1. Understand your gross and net income

Your gross income is related to total earnings before deductions, while your net income is your take-home pay after tax, retirement contributions and other deductions. This gives you the maximum amount available to cover living expenses, essentials and loan repayments.

Remember: If you have irregular income, such as freelance or self-employment earnings, it’s wise to use an average over the past three months to establish consistency.

2. List your essential monthly expenses

Create a realistic household budget that includes:

• Rent or mortgage payments

• Groceries and daily essentials

• Utilities (electricity, water, internet)

• Transport costs

• Insurance

• School fees or childcare

• Medical expenses

Subtract these from your net income to see how much money is still available to cover other repayments.

3. Add your existing debt repayments

Next up, tally your current financial obligations such as:

• Credit card minimum payments

• Store card balances

• Personal loans

• Vehicle finance

• Other instalments

If these monthly repayments are high, you’ll have less disposable income available for additional debt. This step mirrors how lenders actually assess applications.

4. Work out your discretionary income

Once you’ve accounted for your income after essentials and existing obligations, what remains is your discretionary income - the cash you can safely allocate toward a new loan.

Discretionary income is perhaps the most important metric credit providers consider when deciding whether a loan is affordable for you. Under Regulation 23A of the NCA’s Affordability Assessment Regulations, lenders must assess your existing financial means and prospects, and calculate discretionary income to decide if you can cover the proposed credit instalments without undue hardship.

A simple ratio guideline

In South Africa, the acceptable debt-to-income (DTI) ratio is generally considered to be 36% of your gross income or lower.

This is a general guide - and actual affordability will vary depending on your unique financial situation. The logic behind this guideline is that if monthly debt obligations exceed this percentage, your budget may become strained, especially when unexpected expenses arise.

Understanding lender perspectives

Credit providers don’t just look at numbers, they also examine:

• Credit history and repayment behaviour - how well you’ve repaid loans in the past

• Bank statements and payslips - to validate your income

• Household financial commitments - including spouse or partner income where relevant

These checks help confirm that your financial situation is accurately represented and that you have the capacity to meet ongoing loan obligations.

Benefits of doing a pre-check before applying

Taking time to pre-check your affordability means you can:

·       Understand the maximum loan amount you can realistically manage

·       Decide if you need to reduce expenses or pay down existing debt first

·       Save toward a larger deposit (for secured loans like home loans)

·       Build a stronger case when applying for credit

Prepare early so you’re confident about the numbers, and avoid surprises during the formal credit assessment process.

 

Loan affordability isn’t an abstract concept, it's a measurable, practical process that helps protect consumers and promotes responsible borrowing in South Africa. The NCA requires lenders to assess your financial capacity before granting credit, and by pre-checking your own finances, you take control of your borrowing decisions in 2026.

Once you’ve done your pre-checks, feel free to apply for a loan online with RCS. You will get a provisional answer in minutes, and with loan options from R2000 – R300 000, you are sure to find a credit solution that fits your needs.

 

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