A Review Of My EasyCredit Loan Experience

Almost a year ago, I took an easy equities EasyCredit loan. I wanted to supplement a vehicle CASH purchase instead of having to finance it, pay finance fees and then have to go through change of ownership in a relatively short period.

What is Easy Credit? EasyCredit is a loan facility that allows you to borrow up to R300 000 using the shares in your portfolio as security. The loan term is 12 months at prime +3%. The qualifying shares are the Top 100 JSE-listed shares and liquid Exchange Traded Funds(ETFs). It serves as a way to access liquidity from one's portfolio without selling your shares.

When I checked the maximum amount I qualified for, it was R4 768.50. This was based on the Sibanye Stillwater and Satrix Nasdaq 100 shares I owned at the time. these were the only share I held that were in the qualifying "Top 100". Full list can be found here.

There was also some kind of "diversification score" that determined how much you qualify for. the higher the score, the higher the amount. the lower the score, the lower the amount., up to a maximum loan-to-value of 33%.

Below is the summary of the loan agreement:

What I liked:

• You are only expected to pay the interest charge on a monthly basis. You are not expected to repay the capital on a monthly basis. You can repay that at your own pace. all you have to make sure of, is that the cash balance in your ZAR account will meet the monthly interest obligation

• There are no monthly service fees and insurance fee charges ( e.g. monthly service fee of R69 PLUS loss of income, death and permanent disability insurance fee)

• The loan initiation fees are much lower that those loans from traditional banking institutions, usually R1 207.50.

• An interest rate of prime + 3% is much lower than the rate on unsecured loans from traditional banks. These can go up to 38%..

• The lack of all the fees associated with traditional unsecured loans results in a low Credit Cost Multiple of 1.1590. You can lower it by paying off the loan in a shorter than the contracted 12 months period.

• You can pay off the capital amount at any given time

• The value of the shares I pledged increased over the loan period, meaning the increase in value could have paid for the loan if I had not paid any part of the capital. Keep in mind that it is possible that the value of the shares could have decreased over the loan period. It is important to always keep this risk in mind.

• 

  The loan repayment period of 1 year fits into the definition of "short term", as opposed to traditional banks that give you 5 years to pay off a loan. That is borderline 'long term'. In economic and accounting terms, 5 years is definitely not SHORT TERM.

What can be improved:

• The amount you qualify for is based on a selective list of shares. If your shares

  are not on the Top 100 shares or most liquid ETFs, hard luck.

• Consider other accounts beyond the ZAR and TFSA for qualifying shares. I own Nasdaq 100 equivalent in the USD account, and the maximum loan amount would have been much higher if this had been taken into account.

• The amount you qualify for also takes into account a ‘diversification score’ which is a nudge to invest in a certain manner. Since changing my investment approach, the trajectory of my portfolio has changed and become steeper. In as much as i would have qualified for a higher loan amount, the growth achieved might have been lower that what was achieved oner the same period

  

  Change in investment philosophy from 1. to 3.

• You cannot sell the shares you pledged as security. If you do, proceeds from the sales will be allocated towards settling the account

• Consider the overall portfolio when applying liquidation rules. full liquidation rules can be accessed here.

Conclusion:

My experience of EasyCredit has been an easy and pleasant one. I have a final installment of R431.76 to pay by 17 September 2025. The loan truly is in the spirit of "rich people use debt to get rich.", not that i qualify to be called rich.

Would I use the service again?

Absolutely! While EasyCredit is a great tool to avoid expensive short term tranditional loans, I can envision my best use-case being in the midst of a market correction or crash of some sort. Use the loan to buy more shares of my 'long term holdings'.

Have you use EasyCredit? What was you experience of it? What is your opinion of it?

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