How Year-End Bonuses Influence Borrowing Behaviour

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• 11/26/2025
• How Year-End Bonuses Influence Borrowing Behaviour
• ACPAS

How Year-End Bonuses Influence Borrowing Behaviour

Every year, as South Africa heads into the festive season, millions of employees receive their year-end bonuses or 13th cheques. For consumers, this additional income creates a temporary sense of financial relief. For lenders, however, it triggers a noticeable shift in borrowing behaviour; one that can impact approval rates, loan volumes, arrears trends, and portfolio performance well into the first quarter of the new year.
Understanding how bonuses influence borrower decisions is crucial for lenders that want to manage risk effectively, optimise product offerings, and plan operational capacity. Here’s how this seasonal financial boost shapes the lending environment.

1. Bonuses Create a Temporary Feeling of Financial Stability

When consumers receive a lump-sum payment, their confidence increases. Even if they are already financially stretched, the bonus gives the impression of improved affordability, which often leads to:

• New credit applications
• Higher loan amounts requested
• More borrowers looking to consolidate debt
• Increased appetite for short-term loans for holiday spending

Lenders typically see an uptick in applications from mid-November through December as borrowers plan for festive expenses and January obligations.

2. Increased Spending Leads to Higher Short-Term Credit Demand

Year-end is an expensive period for most South Africans due to celebrations, gifts, travel, and school expenses. Even with a bonus, many consumers still fall short; especially if the bonus is smaller than expected or already earmarked for debt repayment.
This drives demand for:

• Small to medium personal loans
• Top-up or repeat loans
• Payday/bridging finance products
• Store account and credit card usage

Lenders with quick turnaround times and digital processes often see the biggest spike in activity.

3. Bonuses Are Frequently Used to Settle Debt

A positive seasonal trend is that many consumers choose to use bonuses to catch up arrears, pay off overdue accounts, or settle existing loans. For lenders, this results in:

• Lower arrears and defaults in December
• Higher settlement volumes
• Improved portfolio performance temporarily

However, this improvement can be short-lived if the consumer falls back into borrowing cycles early in the new year.

4. January Brings a “Reversal Effect”

Although bonuses temporarily boost affordability, January typically creates the opposite effect. Many households face:

• School fees and uniforms
• Transport costs
• Higher household bills after holiday spending
• A long wait for the January pay date

This results in:

• Spikes in arrears
• Late payments or skipped instalments
• Increased requests for extensions or payment arrangements

Understanding this pattern helps lenders prepare staffing, collections strategies, and risk controls.

5. Bonus Season Can Mask True Affordability

A key risk for lenders is that bonuses provide once-off, non-recurring income. If not assessed correctly, it can inflate affordability calculations and lead to over-lending. Leading lending platforms and LMS solutions, such as ACPAS, help mitigate this by:

• Ensuring correct income verification
• Automating affordability checks without counting once-off payments
• Flagging abnormal salary spikes
• Tracking historical earning patterns

This protects both the lender and the borrower.

6. The Opportunity for Responsible, Impactful Lending

Despite the risks, bonus season offers lenders several opportunities:

• Educating consumers on responsible borrowing
• Providing structured consolidation products
• Offering flexible repayment plans for January
• Using analytics to predict high-risk customers
• Encouraging savings or early settlements

Lenders with robust systems and smart data strategies can make year-end lending both profitable and sustainable.

Why Choose ACPAS?

Year-end bonuses significantly influence borrowing behaviour, driving seasonal changes in loan demand, repayment patterns, and consumer affordability. For lenders, understanding these trends and having the technology to respond to them is essential.

ACPAS supports lenders with automated affordability tools, efficient loan origination, real-time credit vetting, and advanced arrears management, ensuring that festive season lending remains compliant, scalable, and responsible.

Contact ACPAS today to find out more about our LMS and how we can keep you safe and jolly this festive season.

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