First I will quickly give a brief overview of the term “Personal Loans”. The sole purpose of a personal loan is to provide you with finances if you are need in desperate need of some money. There are different forms of personal loans. You will then be able to repay the lender with some interest, either on a monthly basis or on you can pay it with one payment. Due to the economic climate of today, personal loans are getting very popular at the moment in South Africa. A personal loan can be obtained at various banks in South Africa or from a private registered credit provider. It can either be used for something like a holiday for your family or as a business orientated investment.
Next I will give a few advantages and disadvantages of using a personal loan for debt consolidation. A very good thing about this is that you can now apply for a loan to repay of all of your outstanding debts. Then you will be liable to only pay the lender a once of fee every month. You can then also enjoy one interest rate and not a few different ones from the previous lenders. You will then also be relieved from a lot of stress. The lenders tend to get very aggressive when you are behind on your payments. By undergoing a debt consolidation process will also help you to get rid of the extra late payment charges, saving you a lot of money.
With all the advantages come disadvantages as well. It is important that you know with a personal secured loan you will be liable to put something down as collateral. Things that you can put down should be the value of the loan obtained. You can use your car or home as collateral. When you fail to repay the loan the banks might come and reposes you property or car. That is why it is thus a very big responsibility. While you are a under a debt consolidation process, the banks can freeze all your current accounts until they feel you are now safe to start buying on credit.
To conclude. We can see that that by applying for a personal loan in order to pay of your debts can be very helpful. It is just of utmost importance that you know that you will be able to afford the loan.
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.