A few months ago, one of my Facebook contacts was posting that she wanted a brand-new stylish KitchenAid mixer, which costs a whopping R10 000. She’s not a baker by profession or trade, but just wanted a pretty appliance in her kitchen. So what did she do? She took out a loan for something she wanted badly, and not necessarily “needed”. 

I was always taught that there’s a difference between good debt and bad debt, and that before you take out a loan, you need to ask if the loan will be saving you money in the long run, earning you money, or building an asset. 

I was also always taught that taking out a loan to buy nice things like clothes, furniture and fancy kitchen appliances isn’t the best idea. It ends up costing you a lot more, once you’ve paid off all the interest. 

If you were taking out a loan for the same amount to study or start a business, it would be different as these would potentially help you earn more money in the future. That means you’d be better off, even after paying off the loan. 

This is also true if, for example, you take out a loan to renovate your house. The renovation would increase its value, enabling you to sell it for a higher price one day in the future. 

It’s not always easy or possible to only take out “good” loans. In the case of the KitchenAid owner, who admitted to also taking out loans for other material things in her home, her best bet could be to do debt consolidation. 

What is debt consolidation

A debt consolidation loan is a loan you take out when you have a number of existing loans that you need to pay off, but don’t have the money available to pay them off immediately or are struggling to meet the monthly instalments.

How does debt consolidation work? 

The idea behind debt consolidation is that instead of paying off the many small loans you have, you can replace them with one loan that you pay off monthly. This could be at a lower interest rate, which will save you money over time and help you pay off debt faster. 

Whatever the original loans were for, debt consolidation may be able to save you money and make it easier to pay off your debt over time. The other plus is that you now only have to worry about one repayment a month, which means you will be less likely to make a late payment. 

The African Bank consolidation loan lets you bundle up to five loans into one consolidation loan of up to R250 000.

Latest on African Bank Stories


Kerotse takes us on a journey how being a winner with Re Ja Joy gave her an opportunity to have her own home.
Fulufhelo entered our Re Ja Joy competition and shares her story about how the winnings helped her become debt free.