Personal loans are not all that difficult to get. In fact, it is surprisingly easy to arrange one for yourself, especially if you have access to the Internet. But before you get yourself into debt, or perhaps organise a way of eventually extricating yourself out of debt, you need to consider your individual situation very carefully.
Most people need to borrow money sometime in their lives
Most South Africans need loans at some time in their lives. These can be either secured loans or unsecured loans. If you apply for a secured loan, it means that the money you borrow will be lent against something.
For example, you might borrow money to buy a car, in which case the security (should you fail to make your repayments on time) will be the car you purchase. If you take out a mortgage on a house, it is the house against which the loan is secured.
Because a secured loan is less risky for the lender, the interest rates offered on these types of deals are significantly less than on unsecured loans.
Things to consider when considering taking out a loan
In deciding whether or not you should take out a loan of any type, and over any duration, the first thing you must do is to ensure that you can afford to make the repayments.
If you can’t, you’ll either have to forfeit whatever your loan is secured against if it is a secure loan of course. If it isn’t, you’ll face some financial penalty, and your credit rating will crash dive making it very difficult for you borrow money in the future.
If you only need money for an emergency situation, e.g. to pay an unexpected repair bill, or to buy a new appliance for your home etc. the best thing to do is to take out a short-term personal loan.
Choose your loan provider with care
Depending on the lender you choose, the duration of the loan can vary from a matter of days (a Payday loan for example), to anywhere up to about 6-months. The other thing that will differ from lender to lender is the interest rate, and how much you will have to repay in total. This is something you obviously need to check out carefully.
One thing you should avoid doing is to take out a short-term loan just to pay off other sorts of debt. You can all too easily jump out of the frying pan and into the fir. So if you do find yourself in this situation, the best thing to do is to seek some professional advice.
The web may be your fastest solution
The five trendiest banks that are very popular right now for getting personal loans from are Absa, African Bank, Capitec and Nedbank. If a bank is not your preferred option (sometimes their conditions and requirements can be off-putting) you’ll find plenty of choice online. An online is probably your quickest and simplest solution.
Banks have reported a steady decrease in the number of loan applications as some people turn to their families for help. Although this solution does sound attractive, it does also have its pitfalls.