A personal loan can be a very helpful way of getting finance when you really need it, but you need to make sure you can afford the payments. Read our tips on what to look for when taking out a quick loan.
Personal loans, as with all debt, can be a slippery slope and so need to be managed carefully.
Here are some tips when taking out a quick loan:
Shop around and make comparisons.
• Even though the National Credit Act has regulated the credit industry, it’s still relatively easy to apply for and get a personal loan.
• Don't be fooled into accepting the first personal loan option you're given.
• Shop around and compare rates, payback time and the flexibility of your budget.
• Many financial institutions offer an online personal loan calculator.
• When you shop around, ensure you know and understand all the fine print and terms and conditions.
Avoid getting trapped in debt.
• As you shop around, keep a sober assessment of your financial situation in mind.
• Make sure you can afford the loan repayments and interest even if emergency strikes and you find yourself with a disposable income lower than what you were expecting.
• A good rule of thumb is to take 10% off your own salary and calculate your personal loan accordingly.
• It’s extremely dangerous to eat into a salary on which you’re already struggling to make ends meet.
• If you find yourself in this situation it’s better to visit a financial advisor to help manage your finances.
Keep your personal loan applications to a minimum.
• Every loan application you make is recorded on your credit record.
• Too many applications reflect poorly on your credit rating.
• This makes larger loans in the future more difficult and expensive.
• Before you even apply for a loan it’s best to check your credit rating to see that all is in order.
• Ascertain independently that you can afford this loan, ideally using more stringent criteria than a bank would.
• This way you need only apply for one personal loan and can be relatively sure it’ll be approved; thus keeping the applications to a minimum and keeping your credit score clean.
Be honest with your credit provider and yourself.
• There’s no point in pretending that you can afford a personal loan that you cannot.
• If there’s a chance you’ll be cutting into your grocery bill every month to pay your loan you probably can’t afford it.
• Don’t take out a quick loan with the assumption that you’ll get a pay increase in the next month or two as you can’t predict the future.
Looking for a competitive rate on a personal loan of up to R150 000? We can help.
Consumer appetite for credit facilities has increased according to the Credit Market Report (CCMR) published by the National Credit Regulator (NCR) in April.
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