Many around the world are pulling at the purse strings as the global economy takes a hit, and unemployment and high living cost makes it a challenge just to live in the day to day swing of things. For many families this means relying on credit when times are tough, and this can get out of hand quickly if it goes unchecked.
If you rack up an extreme amount of debt a debt review with a debt counselor is the best possible option for you. But what if you only are in a small amount of debt? Then you have the option to take out a personal loan in order to straighten out your finances. If you’ve been saddled with debt in the past, or currently have a bad credit score then this can be difficult to do, but there are ways around this.
While in some countries there are loans that are given without a credit check, this typically does not exist in South Africa’s lending market. This legislation is meant to protect both the lender and lended alike. When you take out a personal loan, both parties are potentially liable to a great deal of risk. For lenders, there is a great deal of risk in offering you a loan for many reason, one being the financial history that you have that negatively works against you. By knowing about your financial history and your credit issues before giving you a loan, the banks and creditors can get a sense of the interest rate and fees they’re going to charge, or to evaluate if they feel comfortable giving you a loan at all.
From the borrower’s standpoint this is also important, as you may not even know how badly you’re in debt, or what the status of your credit currently is. If you do know the current state of your credit, this serves as a reality check and also makes you aware of the level of fees and interest rates that are going to be charged and added on to the amount you’re borrowing from a lending company.
If you have a bad credit score, then it's highly unlikely that you will get a loan. Get your credit score first and see where you can improve.
Requiring all personal loans to be subject to credit checks also acts a deterrent to abuse and misuse from both sides of these personal loan dealings. If you know that you’re going to be denied for a personal loan due to the current financial situation you’re in, or you find out that you’re not eligible, this opens up another set of better options. Taking out a personal loan is far from a long term solution, and this is something that you need to keep in mind when pressing forward to get a personal loan or to pay off your finances.
There are services that debt management companies can offer you that are a much better alternative. Why not sit down with a debt counselor from one of these companies to see what they can do with a debt review? This is a great option, and it will reduce the amount of debt you owe, while providing you with a long term solution.