Most South Africans will at some stage in their lives be in a position where they will need to access a loan in the form of a personal loan. We've covered some basics on what a loan is to help you understand more about the context around getting a loan. We also spoke about why someone will need or will want to get a personal loan, in a previous article.
But, before you head on over to our Fincheck Loan Comparison Calculator and get yourself one, we need to show you one or two more things about a personal loan.
Every person should know that there is always responsibility and consequences when making a financial decision to access more cash in the form of a loan. So we crafted some simple pros and cons for you to know about before applying for a personal loan.
3 Pros on getting a Personal Loan
Quick Access - A Personal Loan can be available in a short amount of time (usually within 48 hours). This makes it a great resource for emergency funds.
Unsecured / No Assets Necessary - A Personal Loan is money that can be obtained without having a house available as security against the loan.
Multipurpose Functionality - As mentioned above, a personal loan can be used for an emergency. But, when used responsibly, it's also a great resource for things such as home improvements or short term costs where you don't have the necessary cash flow.
3 Cons of getting a Personal Loan (think of these as responsibilities)
High (sometimes huge) Interest Rates - As you can imagine, since it's available quickly, doesn't need a lot of security, and the cash needs to be paid back quickly, a personal loan tends to have high-interest rates attached.
Good Credit Score Required - You're going to need a good to great credit score and record to qualify for a personal loan. Once again, because there's almost no security necessary for getting a personal loan, financial institutions take your credit history into account when approving a personal loan.
Above Two Combined - When a lender does approve a loan to a South African citizen with a bad credit score, the interest rates attached tend to be even higher! You will also feel like you're in a Big Brother home because of people watching your payments constantly and pouncing when you miss one.
So why do you still want a personal loan?
There's nothing wrong with taking out a loan. In fact, taking out a personal loan can be a smart financial decision! We hope these pros and cons have shown you that you can take out a personal loan wisely by carrying the responsibility for it as a financial decision with consequences.
It’s now safe to head on over to the Fincheck Loan Comparison Calculator and see if there’s a loan for you through our online loan application process!