PERSONAL LOANS: what you need to know?
JOHANNESBURG – Most people will have to borrow money from time to time but yet feel uncertain asking for advice on the subject.
Here are some of the tips that can answer your questions about personal loans from DirectAxis financial service provider.
What is a personal loan?
It is the money that you borrow from a registered financial services provider and pay it back with interest, over agreed period of time.
Why would you take out a personal loan?
The most common reasons for taking loan are to extend, upgrade or renovate their homes, pay for studies or buy or repair a car. Loans can also be used to consolidate debt, making it easier to manage.
Do I have to give a specific reason for getting the loan?
No. Once the loan is approved you can use the money for whatever you want to.
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 to the same value as the loan such as a house or a car as a guarantee you will repay the money.
With an unsecured loan, your creditworthiness will determine whether you are granted the loan and the interest rate you will pay. Usually, your income and credit score are used to make a decision.
Do you pay the same interest on all personal loans?
No. Interest rates vary depending on a variety of things including the kind of loan you get, where you get it 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. It depends on the credit provider, the amount you borrow, your financial position as well as 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 document confirming your residential address.
- Proof of income. If you’re employed this is as simple as you providing copies of recent payslips. If you are self-employed you will need to submit three months’ worth of bank statements.
