All you need to know about personal loans

JOHANNESBURG – Here are some answers to questions you might have about personal loans from DirectAxis financial services provider ...

October 11, 2016

Phathu Luvhengo 1 minute read

What is a personal loan?

It is money borrowed from a registered financial services provider, paid back with interest, over an agreed period of time.

Why would you take out a personal loan?

The most common reasons for applying for a loan is to extend, upgrade or renovate your home, pay for studies or buy or repair a car. Loans can also be used to consolidate debt, making them easier to manage.

Do I have to give a specific reason for getting the loan?

No. Once the loan has been approved you can use the money for whatever reasons you have.

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Are there different types of personal loans?

Yes. There are two kinds of personal loans: secured and unsecured. A secured loan is where you offer something as the same value as the loan, such as a house or a car, as a guarantee that you will repay the loan.

With an unsecured loan, your creditworthiness will determine whether you are granted the loan and will also determine the interest rate you will pay. Usually, your income and credit score are used to make this decision.

Do you pay the same interest on all personal loans?

No. Interest rates vary depending on a variety of reasons, including the type of loan, where you get the loan from and your creditworthiness. Secured loans generally have lower interest rates than unsecured loans.

What is the term of a loan?

The term is the time you have to repay the loan. This depends on the credit provider, the amount you borrow, your financial position and your preference for repayment. Terms can vary and, generally, providers offer terms of up to six years.

What do you need to apply?

Proof of identity in the form of a clear copy of your South African identity document.
Proof of residence, such as a recent rates or electricity bill or similar documents confirming your residential address.
Proof of income. If you are employed ,this is as simple as providing copies of recent payslips. If you are self-employed, you will need to submit three months’ bank statements.