Loans help us in the time we do not have enough money to make expenses. There are some unforeseen expenses that could come our way when we have little or no money to solve them. This is when taking a loan is the most reasonable thing to do. For you to get a loan, you must have a good credit score. You can get a personal loan from any financial institution in South Africa. The leading banks offering personal loans in South Africa, the requirements and so on are all-inclusive in this article.
What is a Personal loan?
Personal loan is the type of loan you can borrow from a financial institution. Most of the personal loans you can get are unsecured. This means you don’t need to provide a collateral to get them. While secured personal loans are the ones, you must provide a collateral to get.
However, the lenders of the personal loans decide whether to give you a personal loan. For them to decide this, they will check your credit history, credit score, debt-to-income ratio and your free cash flow.
If your credit history is not good (positive) they will offer you a secure loan (loan with a collateral). You can then use your home, car, business, or any other asset that you own.
What are the requirements for Personal loans?
- A clear copy of your South African identity card
- Be 18 to 65 years old
- Provide your residential address
- Payslips as a proof of income or 3 months’ recent banks statement
- Be an employee with a permanent job or a self-employed individual
- Earn at least R3,500 monthly from a valid bank account
- Possess a valid passport with a work permit (for non-South African citizens)
- Sometimes you have to provide a guarantor
What is the maximum or minimum amount that I can borrow from Personal loans?
Before getting a loan, know whether the financial institution you’re targeting offers the amount of loans you need. This helps you to know whether to look for an alternative lender. For personal loans, the minimum and maximum loan amount surely differ in financial institutions. However, usually the minimum amount of personal loan is R1,000. Whereas, the maximum amount of personal loan is R250,000.
How can I apply for a Personal loan?
Applying for a personal loan is easy once you already have a lender you prefer. Many banks and other financial institutions offer Personal loans across South Africa.
The following is how you can apply for a personal loan:
- By visiting the branch of the financial institution you prefer:
Once you arrive, request for a personal loan and follow the directives they will give you.
- Request for a personal loan online
Today in South Africa, you can apply for a personal loan online. You wouldn’t need to be present in any of your lender’s branches to apply for a loan.
All you need to do is:
- Have a smartphone, tablet or a personal computer with a good internet connection.
- Visit your lender’s website.
- Then apply for a personal loan
- Fill out the loan application form online
- Provide all the personal details they need
Note: Make sure you provide all the requirements they need from you. You can always contact them by phone call or email for further inquiries.
What is the interest rate for Personal loans?
You must know the interest rate that the personal loan you want to get attracts. This will help you know whether you can afford to pay it back. The interest rate on personal loans is 24.5% per annum.
How do they calculate interest on a Personal loan?
Lenders calculate your interest rate according to the information they get from your credit history. They can also check your monthly income and the amount you want to borrow and other things.
Are there any additional fees on Personal loans?
Verify if there are additional charges on the personal loan you want to get. They do not include these additional charges in your interest rate. Additional fees come as initiation fee and monthly service fee. Because of this, know if you can pay them along with your loan and interest.
However, additional fees on personal loans differ across financial institutions. Some financial institutions have additional fees on their personal loans. While some others do not have additional fees.
Initiation fee and monthly service fee.
How fast can I get the Personal loans?
The financial needs you have would not give you enough time you need to get things right. Because of this, know how fast you can get a personal loan.
Usually, you’ll get the personal loan once you meet the criteria and present all the requirements your lender needs. However, once you successfully apply for the loan, you will get the loan within 24 hours (one day).
What is the repayment term for Personal loans in South Africa?
Lenders usually prefer applicants they see as a low credit risk. These kinds of applicants are those who usually repay their loans and bills on time.
Personal loans usually have a minimum repayment of 12 months, and a maximum repayment period of 72 months.
What are the personal loans that determine how I make my repayments?
There are some personal loan types that surely determine how you make your repayments.
These types of personal loans are:
- Fixed-rate loans:
This is the type of personal loan which your rate and monthly payments don’t change.
- Variable-rate loans:
Here, your rate and payments can change. This change happens as market interest rates change.
What happens if I cannot repay a personal loan?
There are consequences you will face if you cannot repay your personal loan.
The following are the consequences you will face if you cannot repay your personal loan:
- It will affect your credit score
- Failure to repay your personal loan will affect the credit score of your guarantor
- You will face legal action by your lender
Can I repay a personal loan early?
Some borrowers would prefer to repay their personal loans early. They repay their loans early, and usually immediately they get the money in full. However, some lenders still charge a fee for paying off your loan early. The lenders want to make money off your loan as interests. So paying off your loan early would deny them the money.
What are the different uses of Personal loans in South Africa?
Personal loan gives the borrowers the liberty to spend it on anything they like. The lenders do not follow-up the use of the loan.
You can use your personal loan for a lot of purposes of which are:
- You can use a personal loan to fund all your wedding expenses
- To renovate your home, refurnish, redecorate and so on
- Fund your expensive family trips and Vaca rooms abroad
- It helps to fund your medical expenditure
What are the pros and cons of a Personal loan?
There are always pros and cons of any form of loan. Loans help us overcome our needs that need urgent response. But there are some things we have to bear for the loans.
The following are the pros of Personal loans:
- It is flexible, and you can use the personal loan for various expenses. The lenders do not have to monitor the expenses you would make with the money.
- Once you have a good credit score, you do not need a collateral to get a personal loan. Because of this, you will not have to risk losing your assets.
Despite how attractive the personal loans are, they surely have their downsides. Anything that has a pro must also have a con.
The following is the list of 5 leading banks that offer Personal loans in South Africa:
- African Bank
The following are the cons of Personal loans:
- Personal loans have high interest rates because the lenders see it as a high risk. They see it as high risk because most times they do not give out personal loans with collateral.
- Many financial institutions will charge you a prepayment penalty if you pay off your loan early. They would like to make up for the interest they will lose if you repay the loan earlier.
Personal loans help you make expenses on whatever you desire. There are no restrictions on the expenses you make with the personal loans. Your good credit score helps to give you the personal loan. Because of this, always ensure that you make your repayments appropriately to maintain that good credit score. This is because you might need another personal loan in the future. And your credit score will equally play the role of letting you get it.