Christmas Loan - Does Borrowing Make It Merrier?

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They say Christmas comes, but once a year. So, should you borrow to make the most of the festive and joyous mood? After all, it's difficult to enjoy Christmas if you don't have enough money for groceries, gifts, travel, and other celebrations you may have planned. 

To help you decide, this guide looks at Christmas loans, how they work, and what to watch out for if you're planning to spend borrowed money during this popular holiday.

Christmas Loans Are Usually Personal Loans

Christmas loans are personal loans that provide you with extra cash when you're short on savings. Generally, personal loans have the following features:

  • Loan amount: Personal loan amounts can go up to R250,000. However, the lender will first perform an affordability assessment to ensure you'll be able to service the loan. Therefore, your borrowing capacity depends on your income and the amount of debt you have, plus other factors.

  • Loan terms: Depending on the loan amount, repayment periods can range anywhere from six months to five years. Most lenders have flexible loan terms, meaning you can spread the cost of your Christmas spending over any period of time that matches your budget.

  • Monthly repayments: You pay back your debt in monthly instalments over a fixed period. If you want smaller instalments, it's best to go with a longer loan term. Choosing a shorter term means your instalments will be larger, but this is a good thing if your budget can handle it. That's because you don't have to pay as much interest when you pay off your debt faster.

  • Fixed/variable rate: Most personal loans have a fixed interest rate. As the name suggests, a fixed rate never changes, making it easier to budget for your loan. On the other hand, variable rates can change, so it's possible to save if the rate drops.

  • Secured/unsecured.  The majority of personal loans are unsecured, so you won't need to use your valuable possessions as collateral. With secured loans, you may need to put your car or some other asset as security for the loan. Secured personal loans tend to have lower interest rates because of the reduced risk to the lender. If you fail to repay the loan, the lender will seize the asset and sell it.

Sometimes A Christmas Loan Can Be a Payday Loan 

Some payday loan lenders can also advertise their financial products as Christmas loans. Payday loans are short-term loans only, and in most instances, you have to pay back the loan in full on the next payday. 

Other lenders will let you split the loan into instalments over two or three months if they're flexible. Christmas payday loans are generally not ideal because of the higher interest rates. Typically, people take out payday loans to cover financial emergencies. 

The advantage of using payday loans for this purpose is because you receive the money quickly. Some payday loan lenders can transfer the money to your bank account within minutes if you're a regular customer.

However, if you don't have an emergency, it's often better to take out a personal loan for your Christmas spending since they come with a lower interest rate. Otherwise, the Christmas holiday can end up being more expensive when the time comes to pay off high-interest debt.  

Other Christmas Loan Options

Besides using your savings and side income, you can also consider the following Christmas loan options:

  • Credit cards and personal line of credit: Credit cards and personal lines of credit work similarly in that you can borrow only what you need up to a specific limit. In addition, you only pay interest on the amount you owe. Credit cards, in particular, are advantageous if you get one with an interest-free period. 

  • Borrowing from family and friends: Depending on the trust between you, it can be easier and more convenient to borrow from a relative or friend. You just have to come up with a repayment plan that works for both of you.

Advantages of Christmas Loans

  • Your Christmas will become more affordable if you break up the expenses into smaller instalments.

  • You can take out a loan without collateral.

  • The money can be used for almost anything.

  • If you pay back the loan as agreed, your credit score will improve in the long run.

Disadvantages of Christmas Loans

  • Using borrowed money means you're paying extra for every purchase you make because of interest.

  • You may not be able to get a low interest rate if your credit score is not-so-perfect.

  • You'll borrow money for the Christmas holiday only to spend many months or years paying it off.

How to Compare Christmas Loans and Choose the Best One

When you have several loan offers, considering the following factors will help you choose the best option for your budget and needs:

  • Interest and fees: The most favourable loan option is typically the one with the lowest interest rate and fees. However, keep in mind that the interest rate you get is usually based on your credit score. Most lenders will have an interest rate range to give you an idea of the cost, while others offer free loan quotes that show your personalized interest rate. 

  • Repayment flexibility: Repayment flexibility covers things like whether your monthly repayments can be customized to suit your budget. You should also check to see if the lender allows you to make early payments without penalty.

  • Time to receive the money: Most online lenders have fast applications if you're in a rush to get some extra cash for the Christmas holiday shopping season. They can also process the transfer in as little as 24 hours after approval.

Christmas Loans FAQs

Can I get a Christmas loan if I have bad credit?

It's possible to get a Christmas loan if you have bad credit, but that usually means you'll get a higher interest rate than average.

Where can I get a Christmas loan?

You can get a Christmas loan from one of our partner lenders. When you submit an application at, you'll receive several offers that you can compare. Simply choose the best option for you and complete the application to receive your money.

How do I apply for a Christmas loan?

You can apply for a Christmas loan by filling in our short application form. Most of our partner lenders have the following requirements:

  • Be 18 years and above.

  • Have SA citizenship or permanent residency.

  • Provide proof of a reliable monthly income, such as your latest payslips and bank statements.

What should I avoid when taking out a Christmas loan?

As the year ends, we all look forward to Christmas, and when the time comes, it's easy to be influenced to shop more with all the advertising around you. To avoid borrowing more than you need or can afford, always budget ahead of time. 

Also, when comparing personal loan offers, watch out for high interest rates and steep fees. In addition, don't submit too many loan applications in a short space of time, as this can affect your credit score.

What can I use a Christmas loan for?

You can use a Christmas personal loan on any legitimate purchase. The list includes presents, food, decorations, trips, and other costs associated with holiday giving and celebrations.

How much do you need?

Get a Loan up to  R350,000

Representative example: Estimated repayments of a loan of r30,000 over 36 months at a maximum interest rate of 29.25% apr would be r1,381 per month including fees. Repayment terms can range from 2 - 72 months. Myloan is an online loan broker and not a lender. Our service is free, and we only work with NCR-licensed lenders in South Africa. Interest rates charged by lenders can start as low as 19.25% apr, including an initiation and service fee determined by the lender. The interest rate offered depends on the applicant's credit score and other factors at the lender's discretion.