A personal loan is money borrowed from a bank or credit provider for general purposes.
People usually qualify for these loans based on credit ratings and monthly income. Often offered at a personalized interest rate based on the repayment term and your credit score.
Personal loans in South Africa are mostly referred to as unsecured loans. The loan is granted based on the borrower's credit history, no collateral or asset needed to secure the loan.
From all the different types of loans offered in South Africa, personal loans are the easiest to apply and qualify for. The application usually happens online or via the telephone.
How Personal Loans Work
In simple terms, when you apply for a personal loan, you'll receive the amount once-off and repay with fixed monthly installments.
The decision on monthly repayments varies between lenders.
Personal loan applications allow borrowers to choose flexible repayment terms that best suit their budgets. You would usually pay back the loan over 60 months or 5 years' time depending on the term you choose for the loan application.
Some lenders offer you the option to pay the loan quicker without penalties. Also because with paying off the loan earlier than the initial agreement as it'll affect your credit report negatively.
Any personal loan application will have interest charged to it. Rates depend on your credit score and income.
A good credit guarantees you the lowest interest rate on your loan. The rate is regulated by the National Credit Act in South Africa, so you can be sure to get the most affordable and reasonable interest.
Most approved personal loans are offered at a fixed interest rate. This seems to be the best option South African loan seekers prefer over the variable rates that changes depending on the economy of the country.
Personal Loans Calculator
Many personal loan providers offer a free calculator tool to help borrowers understand the loan application details upfront.
We also offer a loan calculator tool to help with monthly repayments and total interest for your peace of mind. This will help you make a sound decision before committing to a loan agreement.
How to Apply for Personal Loans
Many lenders and banks in South Africa have made the process of applying for personal loans very simple.
You could apply for a personal loan using any of the following methods:
- At the branch/bank
- Via SMS
- And online (most preferred)
In fact, most of these institutions offer a fast approval step for online loan applications.
You'll need to provide the following documents for the application of your loan.
- Certified copy of your ID
- Banking statements
- Proof of address
This will help them offer you a personal loan that best suits your current financial status.
How To Use Personal Loans
Personal loans can be used for anything you want.
You could settle all your debts for one central and affordable monthly installment, renovate your home, make an expensive purchase, medical expenses, children's study fees and so on, the choice is yours.