Below you will find the best way and the things to consider before applying for a personal loan in South Africa.
- The interest rate may be higher than you expect. You will have to know the exact rate at which the loan is being given out. You need to verify or ask the loan officer to explain detail how much you would paying either daily, weekly, monthly or annually.
- Your credit score matters more for personal loans: With no collateral, all the lender has to go on is your personal creditworthiness. You can expect the available interest rates to increase steeply if your credit is average or poor, going up as high as 36 percent APR.
- A personal loan is not a long-term solution: While the typical mortgage is paid off over decades, personal loan terms are typically limited to seven years or less. This can be a good thing, because you should never borrow money for longer than you really need to.
- Banks aren’t the only option: As nonprofits, credit unions often offer lower rates and fees than banks for the same personal loan products. Then there are the crop of new “marketplace lenders,” such as SoFi and Prosper, which promise easy, quick online loan approval and good rates, especially to folks with the best credit.
- Personal loans can be a lifesaver when you need cash quickly: When an urgent financial need rears its head — a leaky roof, an emergency medical bill, or, heaven forbid, an unexpected funeral — many people turn to credit cards or payday lenders for help. These lenders can be punishingly expensive, but they may seem attractive.
- Personal loans can save you a lot on debt you already have: One of the most common uses for a personal loan is to consolidate existing debt, like credit card balances, student loans, and car loans. You may be able to get a lower interest rate than you were paying on your other debts.
- Watch out for fees and extras : Some lenders will try to throw in an insurance policy or other extra expenses as you close the loan. You may or may not want an insurance policy to make sure that your survivors aren’t stuck with your loan if tragedy strikes