In order to apply for a personal loan in South Africa you will be subjected to a credit check. The applicant should be 18 years or older, be a South African citizen and have a minimum salary of R1500. Different companies might have different requirements but in most cases are they pretty much the same. In this article I will explain the pros and cons of secured personal loans in South Africa.
It is important that you know before approaching a loan company, then you have to have a South African ID and a proof of residence. You can use your electricity bill or your Telkom statement should be sufficient.
It is important that you know that a secured loan can only be obtained if you have an asset to provide to the lender which you can out down as collateral on the loan. The reason for this is so that the lender has some form of security on the loan. It is important to know that if you fail to repay the loan then the lender can take your car or your house to reimburse the loan.
A secure loan poses less risk to the lender, making them easier to obtain. This type of loan is very popular for people who have bad credit against their name. On the other hand is it important to know that the borrower is at much higher risk because if they fail to sustain the loan then they are at risk of losing their assets.
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.
With a secured personal loan the banks are normally a bit more lenient on their wallet, depending on the value of your assets which you are able to supply as collateral. The reason for this is because the credit provider is at much less risk than an unsecured loan. You will find that the term of the loan is also a bit longer, so the monthly premiums will be a bit lower.
We will see that different companies have different rates and fees. Factors that will have a direct influence on the amount that you will have to pay per month is your income, employment history, credit history and the value of the loan. It is important that you know and understand all the terms, conditions, rates and fees of your loan before you sign any papers.
Now that we understand the pros and cons of a secured personal loan it is still very important to evaluate your finances so that you are 100% sure that you will be able to sustain the loan. You don’t want the repo guys to come knock on your door asking to hand over your keys to your car.