There are banks in South Africa that grant loans without collateral. You might not see this kind of loan offer in many financial institutions. Many borrowers will definitely pounce on loan offers like this. However, a good number of them may not qualify for such loans. Lenders know the parameter they’ll use to sift the worthy borrowers of such loans. How to qualify for loans without collateral, banks that offer them in South Africa are all-inclusive in this article.
What is a loan without collateral?
Loans without collaterals means you can get a loan without providing security for it. They also see it as an unsecured loan. The lender doesn’t ask you to provide any form of security for the loan they give you. Besides that, lenders risk losing their money to borrowers. So loans without collateral usually attract higher interest rates. Whereas loans with collateral have lower interest rates.
Where can I get loans without collaterals in South Africa?
There are banks that grant loans without collateral in South Africa. You must make sure that your choice lender provides loans without collateral before requesting it. This could help to save you some stress and time. However, the banks that offer loans without collateral are below.
Banks that grant loans without collaterals in South Africa
- Capitec Bank
- Standard Bank
- Absa Group
- First National Bank
What can increase my chances of getting loans without collateral?
There are things you should possess that can increase your chances of getting a loan without collateral. Your chances of getting a loan without collateral could be slim. This is because financial institutions need security for the loans they give out. They risk losing their money should you cannot repay the loan.
The following give you a better chance of getting a loan without collateral:
- Have a good credit rating. This is usually what lenders assess before they give out loans to lenders.
- Possess a low debt-to-income ratio. This has to help you support monthly repayments of your debts.
- You should have a stable credit history. When you make timely repayments of debts severally for a few years. Lenders won’t find it difficult to give you loans without collateral.
- Have a steady income. You’ll have a better chance to land a loan without collateral if you have a steady income. This shows the lenders that you’ll have funds to repay the loans without placing a collateral.
You can also check out loans for non-salary earners in South Africa
How can I apply for loans without collateral in South Africa?
The application process of loans varies across financial institutions. Some financial institutions prefer the traditional means of application, while some others prefer online application.
The following are how you can apply for loans without collateral:
- Apply online: When you apply online, you could finish all the loan application process at a go. You wouldn’t need to make a phone call. And you can get the loan within 48 hours. Check out online loans in South Africa
- Bank application: You can apply through a bank’s online platform. But in most cases, they’ll prefer you visit them in person to complete the loan process. Besides that, they could insist you have an existing account in their bank before you can get the loan.
- Apply through a credit union: You must belong to a credit union before you can get a loan from them. Where you work or live in might be a determinant of your membership. But some credit unions overlook that and allow anyone to be a member.
How can I compare loans without collateral?
Compare loan offers of financial institutions before getting the loan you want. This will help you make the right decision about the lender whose offer suits you best.
The following are the features of loans without collateral that you can compare across lenders:
- Check their Annual Percentage Rate (APR). It represents the entire cost of the loan. Also, it includes the interest rate and any fees the loan attracts
- Know if they have fixed or variable interest rates. This is because many loans without collateral come with fixed interest rates. Pay a particular interest rate for the entire loan term. Whereas variable interest rate could change over the loan term
- Ensure your APR translates to monthly payments. Compare your APR across lenders and know how you can fit it into your budget
- Compare the time they disburse funds. Some lenders could fund a loan within 24 hours. Whereas some others could fund within 48 hours or even a week
Loans can help you solve problems, especially when you do not have enough cash in hand. Loans without collateral provides that freedom of getting a loan without risking your assets (collateral). However, loans without collateral most times come with higher interest rates. Before getting such loans, ensure that you are financially capable to repay them adequately.