Smart Money Moves: 10 Tips For Finding A Personal Loan Provider

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Taking out a personal loan is a significant financial commitment that requires careful consideration. It's important to assess your financial situation and consider alternatives before you apply, advises Sarah Nicholson, operations manager of JustMoney.co.za, a platform that helps South Africans make good money choices.


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If you decide to take on debt, do your homework and investigate loan options from your bank or a reputable financial services provider, Nicholson recommends.

A loan is paid back according to terms agreed with the lender, usually through monthly instalments over a specific period. Making repayments can be tough, especially if the amount is substantial relative to your income, or if you experience a financial setback, such as unexpected medical expenses.

Freeing up funds

Alternatives to a loan include tapping into emergency savings or using other liquid assets. Asking family members for financial assistance can also provide temporary relief.

If you don’t need the funds immediately, strict budgeting can help you to accrue savings, while a side hustle can help to increase your income stream.

“These alternatives empower you to maintain financial stability while avoiding unnecessary debt,” says Nicholson.

There are, however, instances when taking out a personal loan is prudent.

For example, using a loan to consolidate higher-interest debts into a single, lower-interest payment; financing home improvements to add value to your property; or taking a student loan to boost your income in the longer term, are all good reasons to borrow.

Evaluating loan offers

Many banking apps offer personal loans. Prequalifying online will focus your search and save time; however, Nicholson cautions, multiple applications can make you seem desperate. If credit bureaus receive several requests to view your credit report, this can harm your credit score.

Before you commit, compare loan offers based on interest rates, monthly payments, repayment periods, administration fees, and penalties.

Consider a shorter loan term to minimise total interest payable, if you can afford higher monthly instalments. Ensure you can make early repayments without penalties.

Ask the following ten questions to select your best credit provider:

  1. What is the interest rate for the loan? Is it fixed or variable?
  2. What are the associated fees?
  3. What is the total cost of borrowing over the loan term?
  4. What are the repayment terms and schedule?
  5. Are there prepayment penalties for paying the loan off early?
  6. What happens if a payment is missed? Are there late-payment fees or penalties?
  7. What documents and information are needed to apply?
  8. How long will the approval process take, and when will the funds be received?
  9. Are there any special discounts or benefits for setting up automatic payments?
  10. What happens in the event of financial difficulties during the repayment term?

When taking out a loan, consider adding credit life cover. This offers peace of mind if you’re retrenched or disabled, or experience a life event that affects your earning ability. 

It’s essential to communicate with a lender if you have difficulty repaying the loan,” concludes Nicholson. “Options such as loan restructuring prevent you from defaulting, which has serious consequences for your credit score.

JustMoney.co.za is a trusted voice within the personal finance sector. The JustMoney platform offers articles, money management tools, and a wide range of financial products and services. More than 450,000 South Africans subscribe to the free credit score platform to stay informed and become financially savvy.

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