How do I apply for a personal loan in South Africa?
Points to remember when you apply for a loan
- Why you need a personal loan
- Considerations before you apply for personal loan
- Suppliers of personal loans
Why you need a personal loan
A personal loan is an attractive way of getting money to buy items or make investments you cannot afford presently. While you may be able to save and buy the items in the future, the need for them might be urgent. In terms of investments, by the time you manage to save the opportunity may be gone. When you apply for a personal loan, you get instant access to the item you wish to purchase or investment you want to make. It can help you sort out time-bound exigencies like school fees or emergencies like medical bills after an accident.
Unlike a conventional loan, a personal loan does not require security. You will not need to provide the financial institution with a title deed or vehicle logbook. While this reduces the hoops you have to jump through to get a loan, it increases the amount of interest you have to shoulder.
Things to consider before applying
People have various reasons for seeking credit. Many parents rely on loans to get their children through school while many entrepreneurs will do the same to acquire startup capital. However, if you are in debt and are looking to get a personal loan to clear your other obligations, it might not be a wise move. In any event, your credit history may prevent you from getting a personal loan. Instead of sinking yourself deeper into debt, why not opt for debt management/consolidation?
Another question you should ask yourself is, can I manage the repayments? The repayments for an unsecured loan will be slightly higher given the additional interest. And you will have to repay the loan within a given period. If your paycheck is currently already saddled with other loan repayments or other obligations, you should think twice about getting that personal loan.
Suppliers of personal loans in South Africa
Below are a few reputable personal loan providers:
DirectAxis: This authorised financial services provider will allow you to borrow between R4,000 and R150,000 without having to attach any collateral. However, the lender goes through a rigorous approval process before granting the facility. The maximum repayment period allowed is six years
Clientèle: One of the defining features of a Clientèle personal loan is that it comes with a fixed interest rate for the period of the loan. They claim that applicants can get the cash straight to their bank accounts in just 48 hours. Compared to DirectAxis they offer less cash (R120,000 max) and a shorter time frame for repayment (max 60 months).
Old Mutual: Old Mutual’sMyPersonal Loan offers even less room to manoeuvre compared to the above two products. It offers a maximum of R100,000 with a maximum repayment period of 48 months. The lenders applies a fixed interest rate according to the borrower’s credit score.
There are many other options to choose from for a personal loan in South Africa. Be sure to shop far and wide before you commit to any one provider.
Next step: Complete and submit the form to get a personal loan