As a country facing a lot of debt, we're doing our best to help South African consumers understand credit health, loans and other forms of finance. In this educational series, we're tackling the loan industry, whether it's cash loans, online loans, payday loans or blacklisted loans!
Before we delve into the loan education, remember the brand new Fincheck Online Loan Application page which will help you easily and safely apply for a loan. It's a better way of making your financial decision!
Let's get started.
First things first, what is a loan?
The answer to this question is quite simple actually: a loan is a sum of money borrowed and scheduled for repayment over time plus some (or a lot of) interest.
To explain it technically, a loan is an agreement between a borrower (the creditor) and a lender (the debtor) for an amount of money. This amount of money will, in turn, be repaid by the debtor (this is you) to the creditor (your bank or loan provider) according to the agreed upon terms and conditions. It usually includes interest - unless you can find a gracious and unheard of loan provider!
Choosing the right loan, whether it's a personal loan, cash loan or blacklisted loan, may become a difficult task to the uninformed customer. However, with Fincheck at your service, an online loan calculator will bring into comparison all the necessary elements to meet your need for the perfect loan.
The basic elements of a loan, whether it's a personal loan, cash loan or blacklisted loan mostly remain the same. A loan consists of:
- A payback period;
- An interest rate;
- And scheduled repayments.
The payback period is the timeframe in which a loan's repayment will be scheduled.
The interest rate is the tempo at which the balance of a loan will accumulate as time passes.
Scheduled payments are the way in which repayment of your loan will take place (in either amount or frequency).
So, what is a Personal Loan then?
A personal loan is generally associated with an unsecured loan. It is a great way to get cash when needed for an emergency, home improvements or leisure activities like weddings and holidays.
Personal loans range between R1,000 and R250,000 with a maximum repayment period of 72 months. It's pretty much the bigger and more generous brother of a cash loan! Once you have applied and received a loan, you will need to pay back the personal loan in monthly instalments over your chosen time period.
Before you select a personal loan, you should make sure you have a good understanding of how much money you need and over what time period. This will influence the interest rates charged and the terms in which the lender lends you the money.
Remember: you can also apply through Fincheck's online loan application form and we will do all of it for you in a matter of seconds.
The important thing is that you are able to pay off your personal loan according to the agreed upon time and amount.
A personal loan is a great way to assist you in being able to upgrade your home, buy that new car or simply repaint your home. It is ultimately a means to access funds in a short amount of time.
If you are uncertain how to go about applying for such a loan or which lender is safe and secure, Fincheck is there to help you find safe lenders so you're bothered with loan sharks. You can rest assured that we only associate and partner with secure and registered credit providers.
Let's look at a working example when someone gets a loan
Let's set up a very simple figurative illustration for explanation purposes. A creditor will supply Loan A for R1,000 at an interest rate of 5% per year to be repaid over 2 years in 2 annual payments.
It will be determined that in order to settle the debt at the above-mentioned terms and conditions, 2 annual payments of R537.80 will be required. That amounts to total repayment of R1075.60 (R537.80×2).
But let's say you want to repay Loan A within one year at the same interest rate. The loan calculator will determine one payment of R1050 for that year. This means your total repayment of Loan A over a one year payback period will be R25.60 less in comparison to repaying over a 2 year payback period.
These are very low rates and unrealistic repayment periods, but we're keeping it simple so you understand how it would work. Now that you understand a bit more about loans, we would like to share a simple way for you to apply for a loan.
How can you get a personal loan?
Fincheck always aims to help people make better financial decisions. We have spent a lot of time and effort in building an online loan allocation system to help you get a loan that works for you.
If you fill out our easy online loan application form here, you will get loan comparisons fit for your financial profile!
After you have clicked on your preferred loan provider, they will be in touch as soon as they have determined you meet their minimum requirements. If you don't meet their requirements, we will do our best to get you in touch with another trusted partner who could maybe match your loan application needs!
It's always a good idea to check your credit health if you don't qualify for a loan. To help you with this, we offer FREE credit scores which you can learn about here.
P.S Sign up to our newsletter below to receive an email once we release the next post in this latest series. If you have a moment, please also share this post with a friend or relative you think would like to learn more about credit health!
To your better financial future!
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