What is a personal loan?
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. 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. You can also apply through Fincheck 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 as how to go about applying for such a loan or which lender is safe and secure, Fincheck is there to keep you up to date with the latest costs and fees associated with each lender. This allows you to stop by and keep an eye on all the lenders and what they are charging - all in one loan specific platform. You can rest assured that we only associate and partner with secure and registered credit providers.
Loan Amount: R30,000
Repayment Term: 12 Months
Monthly Repayment: R3,313
Total Repayment: R39,756
Maximum Interest: 28%
Minimum Interest: 16%
Basic Types of Personal Loans
1. Business loan
If you are thinking of starting your own business, the chances are good that you will need funding to assist you in launching your business. In South Africa, there are a couple of options for you to choose from:
Each of these options carries its own unique set of Pros and Cons. When looking for funds to support your business, you need to ensure that additional funding will solve your financial issue. With other words - don't look for finance to fill a leaking bucket.
Additional finance will not solve an inherent business model problem. We're saying this to advise people from jumping onto the business loan train when it may not even be necessary!
Also, keep in mind that even though Venture Capital might not be an outright loan like Bank Finance, it is still a form of money loaned to you, with conditions attached. Consider a Personal Loan when the stakes of taking Venture Capital, Private Equity, etc. are higher than the interest rates and fees attached to paying back a Personal Loan.
2. Debt consolidation
This involves combining several unsecured debts into a single, new loan that provides more favorable terms. Basically, Debt Consolidation means taking out a new loan to pay off a number of other debts. This new loan usually results in a lower interest rate, and consequently, a lower total monthly repayment.
So for example, as a case study you have 4 loans from 4 different lenders or banks. You will add up all of the outstanding amounts you owe to them and move that outstanding amount to one debt consolidation lender. This will then be your only lender to pay every month. You will have one monthly instalment with one interest rate and instead of paying 4 individual lenders, each with its own interest amounts.
A key to remember is that this will make your repayments easier to manage, but it will not take them away. Debt Consolidation could be the answer for you if the interest charged by the consolidation company is less than you are currently paying in your total amount of payments. It is your responsibility to research Debt Consolidation properly and consult with a financial advisor or the consolidation company. Ask these simple questions before taking out debt consolidation:
-Will it enable you to settle all your debts?
-Will it reduce the total current interest rates you are being charged?
-Will it reduce your total current monthly payments?
Remember that this will help you manage your debt and is only a short term remedy. It will not take away your outstanding loans!
By choosing Debt Consolidation, you may receive a better monthly installment compared to all your individual loan payments combined, but it will not remove the debt.
Some Reasons for getting a Personal Loan
Not everyone has medical aid or health insurance. If there's an urgent need for finance to pay a doctor, dentist or hospital, then a personal or pay day loan could be your solution.
It is important to first get a quote from the doctor, dentist or hospital. Then, once you have the total cost of the medical assistance you require, you can compare which lenders will best suit your needs. Keep in mind, compared to a personal loan, the interest rate on a pay day loan will be higher. Fincheck's Loan Comparison Calculator can help you determine which loan will suit you the best.
There are some key points to keep in mind when you consider a personal loan for a health emergency:
-Do you need the money urgently?
-How much money do you need?
-Can you pay the doctor, dentist or hospital back in monthly instalments through a personal loan? Even though this helps to keep cash flow alive, it is still a big responsibility.
Once you have thought about these key points. You can head over to the Fincheck Loan Comparison Calculator to compare interest rates, service fees, initiation fees and hidden costs to find the lender that suits you.
Do you urgently need a new fridge, microwave, couch, bed or any other home appliance? Even though urgent can be debatable, the purchase of any of these items can be big financial burdens on an individual. If you do not have the money to pay for what you need/want, a personal loan could assist you.
A loan will assist you in being able to afford that home necessity. It will enable you to purchase the item and pay for it over a period of time. This will allow you to keep control over your cash flow. But, please keep in mind, you do not want to be in a position where you cannot afford the monthly repayments. This will result in your total loan amount increasing at a drastic pace due to interest and compounding interest. Upgrading and buying new home and leisure equipment is great and helps you feel pride in your home, however, it is never wise to take out a loan to pay for luxury goods where patience could have been a better virtue.
If you are in a situation where your vehicle has just broken down, you need a new starter motor, remove a dent or do any repair work, it can make an unhealthy dent in your cash flow! This is where a loan could be the solution. But remember, a vehicle is a liability and not an asset. If you want to take out a loan to repair or upgrade your car it is important to know that in time that cost will be worth less than what you paid. You will most probably never make your money back with regards to that object increasing in value. Ensuring you have the monthly cash flow to repay your monthly installments on the loan is very important. Once you have checked and cleared that, you can do comparisons on different lenders to find the best deal for you.
When purchasing a new vehicle, car dealerships usually offer a financing option called vehicle finance. This is offered to assist the buyer in making the purchase of the vehicle when the total cash amount isn't available. It is a form of a loan and allows you to repay the outstanding amount over an agreed time period and interest rate.
Fincheck uses a Loan Comparison Calculator that gathers all the relevant fees and costs each lender charges. This makes your comparison research super easy, so once you've made sure you can carry the responsibility - head on over to the tool!