So you want a Personal Loan - do you know these 3 Pros and Cons?

Mar 07, 2016

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!

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Fincheck is a financial comparisons website that organises information to assist the borrower in making their best financial decision.

Fincheck gathers information from numerous banking partners and presents it to the borrower in a simple, understandable way. Lenders benefit from an additional market place and extensive customer reach. Loan amounts vary from lender to lender. Fees, interest rates, loan amounts and credit scores influence the repayment terms. Lenders require personal details to control their risk and assist the government to combat theft, money laundering, terrorism. Fincheck does not endorse any particular product or company. We are an independent company. The information shown and provided is an opinion, based on numbers and must not be seen as advice or consultation.