When people don’t have the financial capital to handle certain expenses, a loan helps solve the problem. A loan can be obtained from a bank, but there are many other money lenders offering the same service. Each lender offers their own interest rates and payment plans.
Popular Loan Services Include:
Handling an application process
In South Africa, money lenders should preferably be authorised financial service providers (FSP). If a company has this certification it’s an excellent proof of their reputability.
South Africans make use of loans to cover many expenses such as:
- Purchasing a vehicle
- Buying a house
- Paying for tuition
- Funds to assist in monthly expenses while waiting for salary to be paid
- Handling unforeseen expenses such as medical bills or house repairs
- Starting a business venture
As long as an individual receives a monthly salary, the loan application process is usually short. Proof of income and expenses is submitted to a money lender. The information is verified by staff, payment plans are discussed and hopefully the loan is approved.
Payment of loan after approval
In a trying economic climate as South Africa has, someone in need of a loan usually needs the money fast. A money lender can deposit the loan directly into a bank account so the lender can start using it to cover necessary costs.
Administration throughout repayment process
A money lender will continually send updated statements. This helps clients plan their upcoming repayments. Paying more than the required amount may result in benefits—such as lowered rates—and should be discussed with the lender.
Credit reports
In South Africa it’s vital to have an excellent credit report and not be blacklisted. This enables one to obtain loans, open accounts and seem favourable in the eyes of financial institutions. Companies who offer loans can obtain a person’s credit report on request, to confirm what their credit rating is.
Mistakes can happen or fraud can take place using innocent people’s information. Checking this status regularly is essential, so one can make enquiries if one suspects fraudulent acts in one’s name.
5 Tips when Making a Loan
1. Pick a money lender with the right type of experience
Money lenders specialise in different types of loans. Certain companies exclusively offer study loans, while others handle vehicle payments. Even banks have different areas that they offer excellent benefits and rates for. Search for lenders that focus on the type of loan you need, so you know they understand the unique requirements.
2. Compare quotes
Make sure you obtain a few quotes before you start the application process. You should determine the reputability of the lender through some reviews from previous clients. Compare rates so you can pick the most advantageous option.
3. Be realistic about your budget
As part of the loan process you need to include loan repayments in your monthly budget. Don’t underestimate your expenses. Be realistic when you draw up this budget so you’re not faced with financial challenges every month.
4. Make peace with the result a loan will have
The monthly repayments may result in a lifestyle change. Due to increased expense, you may not be able to afford previous luxuries anymore. It’s more important to pay off the loan first. Accept this and don’t try to sidestep the reality. In the long term you’ll be thankful you made wise decisions.
5. Find an accountability partner
Spending money becomes easy, especially if a loan puts a large amount in your bank account. If you know money is scarce, help yourself spend it wisely by having an accountability partner. Ask your money lender if this is a service they can help with, or ask a friend. Each expense should be checked and discussed so you don’t regret a purchase later on.