Tag: apply for loan online

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Personal Loans

Unsecured Personal Loans in South Africa: All You Need to Know!

personal loan

Have you been thinking of taking out an unsecured loan? Do you know everything there is about an unsecured loan to make an informed decision?

Since you are reading this blog post, we assume that you don’t have complete information about unsecured loans. Moreover, you might have been confused with so many options on the market.

Don’t worry! In this blog post, we give you a comprehensive overview of unsecured loans that will help you make an informed decision.

What is an unsecured personal loan?

Now, firstly, let’s understand what a personal loan means. So, in brief, personal loans mean borrowing money from a financial institution such as a bank to cover large expenses. You can use personal loans to cover your wedding expense, university fees, renovation of home, or any such personal requirement.

An unsecured personal loan means that you don’t have to provide any personal property as collateral. All you need to do is apply for the loan and get the loan amount without putting your personal property at risk.

Unsecured loans: How do they work?

As said above, that you don’t have to risk your personal property for an unsecured loan. However, this is the reason why unsecured loans have higher interest rates.

Higher interest rates ensure to protect the lenders if you default at paying your monthly repayments. Also, some of the unsecured loans have a borrowing limit for the same reason.

But the overall following is the comprehensive review of unsecured loan:

  • Minimum loan amount: R1, 000
  • Maximum loan amount: R350, 000
  • Loan term: The usual loan term is 1 month to 84 months (7 years) for repayment of a loan.
  • Interest rates: 27.5% is the maximum interest rate for unsecured loans in South Africa.

Apart from unsecured personal loans, you can also choose from other unsecured loans such as payday loan, student loans, and lines of credit.

Unsecured loans: When is the best time?

Since you don’t have to keep the personal property as collateral for taking out an unsecured loan, you can apply for it any time. But it is wise to take out an unsecured loan when you need it the most.

Always remember, you must repay the loan with interest rates in due time. So, apply for an unsecured loan when you the utmost need for money. Here are some situations where having an unsecured loan might be helpful.

  • Buying essential items: If you intend to buy essential items such as a laptop, electronic items that make your life easier, an unsecured loan can assist you with that. If you need money to fix your car, you can apply for an unsecured loan in that case too.
  • Emergency: If you encounter a medical or family emergency, taking out an unsecured loan will be advantageous to cover the expenses.
  • Holiday or wedding: These events are quite expensive, but they add value to your life. And if you need financial help to pay for them applying for an unsecured loan would be a great idea.
  • Debt consolidation: If you have several smaller debts, you can use an unsecured loan to consolidate those debts effectively. Now, you will have only one debt to repay.
  • Investment: If you want to invest in something that will give you profit over time, you can use an unsecured loan.

Secured Vs unsecured loan: The comparison

  • As mentioned above, you don’t have to put your personal property such as a car or home as collateral when you take out an unsecured loan. On the contrary, secured loans need collateral.
  • If you take out unsecured loans, there is no risk of losing your personal property. If you default at repayment. Whereas in a secured loan you can use your property to cover the repayments.
  • Unsecured loans have higher interest rates as compared to secured loans.
  • Lastly, there are some unsecured loans where you must face a borrowing limit. Also, unsecured loans have stricter requirements and if you have poor credit, you might not be able to apply for an unsecured loan.

Unsecured loans: Advantages and Disadvantages

When you are borrowing money from a financial institution, you must consider the benefits and disadvantages.

  • Benefits of unsecured loan:
  • You don’t risk losing your asset since unsecured loans don’t need any security.
  • When you opt for unsecured loans, you can use the money for any purpose.
  • If you fulfil all the requirements of unsecured loans, applying for them is quite easy. You apply for loan online easily with just a few steps.
  • Disadvantages:
  • Unsecured loans have higher interest rates
  • You might have to repay your loan on short term
  • You might not be able to borrow larger amounts as some of the unsecured loans have borrowing limits.

Unsecured loans: How to choose?

  • Borrowing amount: Make sure to decide on how much loan amount you want to borrow. You must be able to afford the loan amount as you need to repay it in due time. Find a loan that can give you the said amount.
  • Interest rates: Although, unsecured loans have higher interest rates, you can find some unsecured loans that can offer affordable rates. Also, you need to choose between variable interest rates and fixed interest rates.
  • Annual Percentage Rate (APR): Make sure to choose an unsecured loan that has a low APR. This will allow you to keep the overall loan cost down.
  • Additional features: Make sure to find as much information about the loan as possible. You don’t want sudden surprises! For example, some unsecured loan asks for credit protection fees that cover in case you lose your job, or you die.

Unsecured loans: Application requirements

The general application requirements for unsecured loans are:

  • Minimum monthly income (depends on the lender)
  • Valid ID issued by the South African government
  • Good credit history
  • Proof of income (payslips for the past 3 months)
  • Minimum 18 years of age or above.

Based on the above information, you can visit our website Snappy Loan to search, review, and compare different unsecured loan offers. Once you have chosen a loan offer, just click on ‘Snap It’ and go to the lender’s website. You can fulfil the requirements and apply for a loan right away. Visit our website now to know more.

Categories
All Personal Loans

Personal Loan in South Africa: A Complete Guide!

short term loan

As per the latest statistics, around 40,000 people search and apply for a personal loan in South Africa. If you are one of them, clearly you are not alone. But do you have a complete guide about a personal loan that will help you navigate your search and application?

Well, in this blog post, we give you a complete rundown of personal loan in South Africa. So, let’s get started, shall we?

Personal loan: What is it?

When you borrow money from a financial institution to cover any financial gaps, it is a personal loan. Since you have borrowed money from the lender, you ought to pay it back. Following are the general features of a personal loan:

  • You can get a personal loan for an amount between R2, 000 to R300, 000.
  • You need to pay back the money in a span of 1 month to 84 months (7 years)
  • You can use the funds for several general purposes such as covering wedding expenses, home renovation, buying a car, debt consolidation, and more.

Standard terms: Definition

  • Loan terms:
  • Principal Amount: This is the base amount that you borrow from the lender. This amount does not include any interest charges or any other fees.
  • Term of Loan: This is the time in which you need to pay back the loan amount. For a personal loan, the loan term is between 1 month to 84 months (7 years).
  • Interest: This is the amount charged by lenders on the borrowed amount. This can vary based on the lender as it is decided by the lender.
  • Monthly Repayment: This is the amount of money you pay back to the lender monthly. This amount is meant to cover your principal amount and interest rates charged by the lender.
  • APR: This is the annual percentage rate also known as the comparison rates. This rate includes all the other debt charges and interest rates.
  • Terms for your situation
  • Credit History: This is the history of all different types of loans you might have taken from the lender. It also shows how you made your previous repayments. In South Africa, you are entitled to have one complete credit report for free.
  • Credit Score: This score is evaluated from your credit history. The score indicates how good you are at repaying your debt. A credit score of 800 and above indicates that the lender can trust you for repayment of the loan. However, a credit score below 579 is not a good indicator. It shows the lender you can default on the loan repayment.
  • Drawdown: Once your application is approved, the lender will draw down the loan amount in your account. You can start using your loan amount as you want.
  • Defaulting: So, if you fail to pay your monthly repayment amount, you have defaulted on your loan. Defaulting can lead to a poor credit score.

Personal loan: How do they work?

Following are the steps generally involved in applying for personal loans in South Africa:

  • Compare Loans: There are different types of personal loan plans offered by lenders. Each plan has different terms and conditions. So, you must compare each credit plan before you choose the one that suits you.
  • Checking Qualification Requirements: Once you have finalized a loan plan that suits your needs and budget, you must ensure that you fulfil all the eligibility criteria such as minimum age or proof of income.
  • Contacting the Lender and Applying for a Loan: Once you fulfil the requirements, you can contact the lender and apply for loan online or going to the nearest branch office.
  • Approval and Agreement Creation: Once your application is approved, the lender will make a loan offer. Once you accept the loan offer, an agreement will be created that will have the terms and conditions for the loan repayment. Once agreed and signed, the lender will draw down the loan amount. You can start using the money for your needs.
  • Repayment: Usually, you must make monthly repayments to the lender. The amount will depend on your credit amount and interest rates. Make sure not to default on the repayment to avoid penalties.

Personal loan: What are the types?

Credit providers who are registered to give personal loan offer to people in South Africa provide different types of personal loans. The type you choose depends on your requirements and if and how you will repay it.

Following are the different types of personal loan:

  • Unsecured Loan: This type of personal loan doesn’t need any type of guarantee however, it comes with higher interest rates.
  • Secured Loan: This type of personal loan needs an asset or property as a collateral guarantee. The loan has lower interest rates and other perks too.
  • Debt Consolidation: If you want to repay all your smaller loan amounts in one go, a personal loan can be used as a debt consolidation loan. You will now have just a single account for a loan.
  • Student Loans: A type of personal loan, this is used to pay for your education and living expenses.
  • Lines of Credit: Just like credit cards, this type of personal loan comes with a maximum credit limit. The repayment depends on how much credit you have used.
  • Overdraft: When you withdraw a small amount of money even when your bank balance is low, this is known as an overdraft loan.

Personal loan: Minimum requirements

  • Self-employed or employed
  • Minimum 18 years of age
  • Must have a regular monthly income
  • Must have a South African residence permit or citizenship

Personal loan: Documentation

  • Valid ID issued by the South African government
  • Residence proof
  • Payslips for the past 3 months as proof of income
  • When you are taking a secured personal loan, don’t forget to give ownership proof for the asset you are using collateral.

So, now you know the basics of personal loans and how you can apply for them. To know more about the latest offers on personal and short term loan, don’t forget to check out our website Snappy Loan.

On our online platform, you can search, compare, review, and apply for a loan online. With just a few clicks, you will be approved for a loan offer and you can get the loan amount in a short while. Make sure to repay the loan amount without defaulting to avoid penalties. Visit our website to know more!

Categories
Short Term Loans

Cover Your Immediate Expenses with Short Term Loans in South Africa

short term loan

Having enough finances to cover your needs is of the utmost importance. But sometimes, there are instances when you don’t have enough funds to cover the expenses. This happens when these expenses come unexpectedly such as sudden medical expenses or business expenses. 

In times like these, you can apply for a short term loan to cover your finances. As the name suggests, short-term loans are meant for short periods only. In South Africa, several short-term loan providers consider 1-2 years for this type of loan. Therefore, if you opt for a short-term loan, you have to repay it within a year. 

When you apply for a short-term loan, you can expect to get a lump sum amount in 24 hours. And it doesn’t matter if you have a bad credit score; you can still qualify for a short-term loan. 

A short-term loan is a great way to tackle any immediate financial expense that is temporary. 

Short term loan features

  • When you apply for a short-term loan, the range of loan amount is R500 to R250, 000.
  • You have to repay the loan amount quickly in about six months to a year. 
  • Within 24 hours of application, you can get the complete loan amount in your account. 
  • As compared to a long-term loan, short term loan has higher interest rates. 
  • Although, it is cheaper to repay a short-term loan as compared to a long-term loan. 

Steps to apply for short term loans

  • Start by determining the loan amount you want to borrow. Make sure that you can repay it comfortably. 
  • Start by comparing different short-term loan offers and choose a lender that suits you. 
  • Make sure to agree with your lender on the following terms: the full amount you will repay, the interest rates, the loan repayment period, and repayment dates. 
  • After submitting your application, the lender will process it. They might check your financial history. 
  • Once you have been approved, the loan amount will be transferred to your account. 
  • You can start using the loan amount to cover your existing expenses while starting to repay the amount. 

Types of short term loans available

 When you start looking for short-term loans, you will find that there are different types you can choose from.

  • Payday Loans 

These are the most common short-term loans available in South Africa. A payday loan is taken when you want to cover some expenses but you are still waiting for your salary to credit. 

Once the salary credits to your account, the lender has the right to take the loan amount with interest. These are high-interest loans and need to be paid in one single instalment. 

  • Short Term Online Loans

In this type of loan, the complete process takes place online. You can directly visit the website of the lender, fill the application form, and await approval. 

Once approved, the amount is credited to your account. When it comes to repayment, the lender can directly take the instalment from your account. 

  • Merchant Cash Advances

This type of short-term loan is great for businesses that want to support their current lack of finances. When a business gets money from the lender, this gives the lender access to the business’s card terminal. 

Now, whenever the business gets payment from a customer through cards, the lender will deduct a small amount till the loan amount is paid in full. 

  • Lines of Credit

Just like credit cards for individuals, lines of credit can be called credit cards for businesses. They can borrow the amount to cover their finances based on the set limit. 

The businesses have to pay the amount back with the interest rates at a later date. Based on the amount borrowed via lines of credit, the monthly repayment amount is decided. 

  • Invoice Financing

This is another type of short-term loan for businesses, where they can apply for a loan against unpaid invoices. The loan amount is usually a small percentage of the total invoice amount. 

Once the customer has paid the invoice, the lender can take the amount borrowed along with interest rates and service fees. 

Advantages of Short Term Loan

  • Get Quick Access to Cash: With short-term loans, you can get quick access to cash. Since you have to repay the amount within a year, lenders usually don’t hesitate to release the loan amount after approval. 
  • Pay Less on Interest: With short-term loans, you get lower interest rate payments. This is because the debt has to be paid in full within a year.
  • Easy Approval: When it comes to short-term loans, there are no strict guidelines. You don’t necessarily need to have a good credit score. The main reason for easy approval is that the loan amount is less as compared to long-term loans. 

Disadvantages of Short Term Loan

  • Unreliable Lenders: Short-term loans can be easily accessed and approved but the biggest drawback is dealing with unreliable lenders. Sometimes, lenders charge higher interest rates and unreasonable fees. 
  • Penalty Fees: With short-term loans, penalty fees for relapse the repayment are quite high. 
  • Small Amount Borrowing: With a short-term loan, you can only borrow small amounts. If you need a larger amount, you have to go for long-term loans. 

Requirements for applying for short term loan online

If you want to apply for loan online, you need to fulfil these requirements:

  • A valid ID issued by the South African government showing your age 18 years and above
  • Bank statement to prove the bank account activity for the last three months
  • Proof of income

Conclusion

Short-term loans are an excellent way to cover your immediate expenses. But make sure that you can repay the loan amount in the given time. It can cost you high if you are unable to repay the loan. 

Also, if you want to check out and compare different short-term loan offers, make sure to visit our website Snappy Loan. We give you a comprehensive overview of the latest offers. Just Snap It! And cover your finances immediately. 

Categories
Get Loan Online

A Simple Guide for Online Loan Application in South Africa

apply for loan online

Most people these days use the Internet to search, apply, and purchase different products and services. And the same goes for bank loan applications. You can apply for loan online right from the comfort of your home.

And it is not just about comfort when it comes to filling online loan applications but you can also get great loan offers at your fingertips. But do you know what it takes to make a successful online application for a loan? Don’t worry! This blog post will give you all the details about the online loan application process. 

What types of loans are available online?

In South Africa, you can find online loan offers for the following types of loans:

  • Short-Term Loans: This type of loan can be easily applied online. You can borrow only small amounts when applying for short-term loans. These loans have higher interest rates, and thus, need to be paid off quickly. Payday loan are a great example of a short-term loan. 
  • Secured and Unsecured Loans: Secured loans come with low-interest rates and require you to provide a property as collateral. On the other hand, unsecured loans have higher interest rates and don’t need collateral which makes them risky. 
  • Debt Consolidation Loan: This loan assists you in paying all your existing debt. This way you are left with just a single loan account that is easy to manage and payback. 
  • Study Loans: These loans are meant to assist your education. Study loans have different structures and lower interest rates as compared to personal loans. 
  • Motorbike Loan: You can apply for a motorbike loan if you want to buy a motorbike in South Africa.
  • Car Loan: If you intend but a car and need financial support, car loans are the best way. 

Checklist to Apply for loan online

Have you finally decided to apply for a loan online? How do you know which loan offer is best for your needs? Below is a checklist that will help you efficiently comparing different loan offers and get loan online. 

  • Loan Term: You can choose a loan term between 6 months and 72 months. Make sure to choose a loan term that gives you a comfortable period to payback. 
  • Minimum and Maximum Loan Amount: Make sure to choose a lender that can give you the flexibility to choose your loan amount. Some lenders in South Africa limit the loan amount range. 
  • Interest Rates: You might already know that low-interest rates are the best choice. But what you don’t know is that you have to choose between variable and fixed interest rates. Fixed rates don’t change over the period but variable interest rates change over time. Both have pros and cons but the choice depends on your requirements.
  • Terms of Repayment: Usually, loan repayment occurs every month. But some lenders give you the flexibility to pay on weekly basis. You can opt for these repayment terms if you want to pay your loan quickly. 
  • Additional Benefits and Fees: To stay ahead of the competition, some lenders give you additional benefits for no extra charges such as excellent customer service. Take advantage of these benefits. But also be wary of any additional fees. The loan might look cheaper initially but might have hidden costs. 

The process to apply for a loan online

Let’s take a look at the general requirement and process of applying for a loan online in South Africa.

Loan application requirements

  • Age 18 years and above
  • Valid South African ID
  • Payslips and bank account statements as proof of income. It shouldn’t be older than 3 months
  • Minimum monthly income proof. Some lenders want you to have a minimum monthly income to qualify for a loan. 
  • Good credit score

The online loan application process

  • Once you have searched, reviewed, and compared different loan offers on our website Snappy Loan, click on “Snap It!” You will be taken to the lender website. You can start applying for the loan online. 
  • Chances are that the lender will ask you to fill an online application form for details such as an address, name, email, and more. 
  • Once you have filled the online application form, click submit and wait for the approval. 
  • After submitting your loan application, the lender will approve it and send you a loan offer. You have to accept the loan offer for you to receive the loan amount in your account. 

Traditional loan application Vs. Online loan application

So, when you compare traditional loan application with the online loan application process, applying for a loan online has got several benefits:

  • Easy and quick applications since you don’t have to visit the lender. Instead, you can apply for a loan online in the comfort of your home. 
  • Most online loan offers in South Africa have instant approval. So, you might have to just for a few hours or business days to get your loan amount in the bank account. 
  • You can easily compare different online loan offers anytime anywhere as the details are always available on the website. 
  • Online loans are also generally a safer option. This is because the information is available online that can be verified easily. You can also check out the National Credit Act that tells you about the lenders that are strictly regulated and other financial services. At Snappy Loan, all the lenders are regulated by the National Credit Act. You can easily find reviews and ratings for different loan lenders online. 

Online loan application has made it easier for people to apply and get a loan from the comfort of their home. But if want extra information or assistance, it would be wise to visit a branch nearby. 

Online personal loan calculator

When you are looking to apply online for a personal loan, don’t forget to use an online loan calculator. This calculator will provide you repayment amount estimate based on the loan amount and loan term. 

When you are comparing loan offers on Snappy Loan, you will find different offers from numerous lenders from South Africa. Choose the loan offer that best suits your needs. Get in touch with our team if you want to know more about loan offers. 

Categories
Student loans

Looking for the Best Student Loan in South Africa? Read This!

Education is key to building a better future and a comfortable life. Even before you finish high school, you have to determine which degree you want to pursue. This means working hard towards getting admission to the right college or university. 

But as a student, your job to make your future bright just doesn’t end there. Once you get admission to your preferred college or university, you need to pay the course fees. Now, not everybody can bag a scholarship. This means you have to prepare your finances so that you can pay the fees on time and start pursuing your higher education. 

And student loans are the best way to tackle this situation. Yes, that’s right! Student loans are the right kind of finances that can get you through your college education without any issues. But before you apply for loan online there are a few things you must consider. 

Things to Consider Before Applying for Student Loan

Let’s start with breaking the biggest misconception regarding student loans. Most people will tell you that student loans are “good debt”. Sure, if you compare it with going into debt for a smart phone, a student loan is certainly a “good debt”. But always remember, you have to repay the loan eventually.

So, before you apply for a loan, get to know the following things:

  • How much you can afford?

This is certainly the first question you must ask yourself before applying for a student loan. Remember, that you have to repay the loan eventually. So, make sure that the total repayment amount is payable and you can afford it.

If you think that you can’t afford the repayment amount, it is best to stay away from making an application. 

  • Student loan Vs Other Types of Debts

When compared to other forms of debt such as personal loan, you can’t declare bankruptcy on a student loan if you fail to pay. 

Let’s get one thing straight! No matter what, you have to repay your student loan. Even if you fail to repay your student loan, the lender will make sure that they get their money back in full. 

This will be done by taking your wages and there is literally nothing you can do about it!

Also, in personal loans, if you fail to repay, the lender will ensure that they get something from you such as an asset that you will keep as collateral. 

But in student loans, YOU are the collateral!

  • Student Loan Application Checklist

Now, if you want to apply for a student loan, here is a checklist for responsible borrowing:

  1. Make sure to calculate how much money you will need to pay for your college years. Include not just your college fees but also your living expenses. This is how you will get a rough idea of how much need to loan.
  2. Remember that student loans have varied interest rates depending on the plan and the lender. Make sure to use a calculator for determining your overall interest rates.
  3. Always make sure to check any hidden or additional charges by clicking “view additional charges and information” on the lender’s page.
  4. Calculate the repayment amount after you finish your graduation
  5. Don’t just choose the first student loan plan you see. Compare different student loan plans to make an informed decision. 
  6. Determine that how much you will be able to make after you graduate. This will give you an idea of whether you can afford the student loan.

How to Apply for Loan Online

Now that you know what things you must consider before applying for a student loan online, let’s move forward to the process of application. 

You can either get loan online or you can visit the nearest branch of the loan provider to get the forms and understanding the different plans available. 

  • Requirements for Application

So, when you are applying for a student loan in South Africa, most loan providers will have the following requirements:

  1. You must be at least 18 years of age or above
  2. You have to provide proof of registration from a tertiary institution in South Africa
  3. You have to provide the latest examination results from the Department of Education
  4. You need to produce a proof of invoice detailing your college fees, living expenses, and books expenses
  5. You might have to open an account with the loan provider
  6. Specify whether you are studying part-time or full-time
  7. Specify the years of study
  • Things to avoid

Always remember, when you take a student loan, you have to repay it after your graduation. So, take on a loan only if you can afford it. Other than this, try to avoid the following things:

  1. Don’t use your student loan money for any other purpose other than the intended purpose, i.e. your education.
  2. If you determine that you can’t afford to take a student loan, avoid taking one at all costs. 
  3. Don’t jump on the first student loan option you see. Compare different plans. Several plans will be suitable for you. 
  • Student loans: Good or Bad?

Ah! This is an age-old question! Most people wonder whether getting a student loan is good or bad. But truth be told it completely depends on your circumstances. If getting a student loan is the only way for you to pursue your education, then go for it!

  • When Does a Student Start Repaying the Loan in South Africa?

Most student loan lenders will give each student a grace period of 3-6 months. This period is intended to give the student a chance to find a job and start earning an income. 

Once your grace period ends, you need to start repaying your student loan based on your plan. 

Before we leave you here with a lot to think about the next step, you can check out the latest student loan offers on our website Snappy Loan. 

All the lenders are operating under National Credit Act. So, you don’t have to worry about getting duped. Compare different loan plans you see on our website to make an informed decision. 

Categories
Debt Consolidation

Debt Consolidation Loan: Smart Way to Repay Your Debt

Most people apply for different kinds of loans during their lifetimes such as student loans, personal loan, car loans, and others. The biggest responsibility is to repay these loan amounts promptly. And that’s where most people struggle. 

They are unable to keep track of their repayments and forget to pay on time. This results in penalties and we know you certainly don’t want that! So, the best way to repay all your loans efficiently is through debt consolidation. 

What is debt consolidation?

Debt consolidation is a smart way of repaying all your smaller loan amounts with efficiency. This financial product will create a large load of debt by combining your smaller debts. 

This will give you a little breather and will allow you to pay the maximum of your loan amounts swiftly and efficiently. Also, if you are someone who pays his/her debt off quickly, you can save on interest rates too. 

Tips to Consolidate your Debt

  • Calculate the total debt that you owe
  • Calculate how much amount you can pay off quickly on your monthly repayment
  • Based on this calculation, contact a lender that fits your budget
  • Apply for credit with the lender
  • Once you receive the credit, repay your old loans
  • Start repaying the new credit as per the term and conditions with the lender

Secured Vs Unsecured Loans

Debt consolidation can be done for all types of secured and unsecured loans. 

Secured loans are taken using a property or an asset as collateral. This means that you need to repay your loan to release the collateral. If you don’t repay the loan amount as per the agreement, the lender has the right to take over your collateral property or asset. 

Secured loans consist of: Car finance, secured personal loans, business loans, secured cash loans, personal asset secured loans

Unsecured loans on the other hand don’t require you to put a property as collateral. Therefore, these loans have higher interest rates for the borrower and higher risk for the lender. 

Unsecured loans include student loans, credit card loans, short term loan, medical bills, and unsecured personal loans. 

Methods of Debt Consolidation

When it comes to different methods of debt consolidation, South African lenders give you numerous options. They calculate your debt size, your income, and credit score for determining the credit amount. 

Let’s look at a few different methods of debt consolidation:

  • Debt Consolidation Loan

This is one of the best ways to pay your old loans. The debt consolidation loan is a specific type of loan that you can use to pay your old loans over the years with the lowest interest rates. And the best part, you don’t need a guarantee or collateral! 

A registered South African lender can give you a debt consolidation loan up to R250,000 with interest rates as low as 15%. You only need to pay a small processing fee. 

  • Secured Personal Loans

If you want to get a large amount of credit, apply for a secured personal loan. You will easily get this loan even if you have a low credit score. 

All you need to do is have a property or an asset as collateral. 

  • Credit Card Balance Transfer

Another method for debt consolidation is transferring your balance debt amounts to credit cards, especially a new one. 

A new credit card has promotional interest rates which are as low as 0%. You can transfer your balance to such credit cards for low interest. Although, once these promotional interest rates expire, you have to pay standard interest rates. 

So, if you are planning on paying your debt quickly, only then opt for this method. 

  • Home Equity Loans

If you have equity in your home, you can use this to borrow credit from a lender. Using this credit you can repay your old loans.

But make sure to pay your home equity loans on time because if you don’t you can lose your home.

Debt Consolidation Loan Vs Personal Loan

Technically, debt consolidation loans and personal loans are not so different. You can get a personal loan for debt consolidation because personal loans can be used for anything. 

But debt consolidation loans are specific types of loans given by lenders for paying back your old loans. You can certainly choose what you want based on your needs. 

Advantages of Debt Consolidation

  • Manage your debts easily
  • Decrease your instalments and get a breather
  • Easy management of your debts will keep you away from being a high-risk customer

Disadvantages of Debt Consolidation

  • Won’t help you if your debt is too much
  • You might have to pay higher interest rates
  • Doesn’t make your debt disappear or fix them

Factors to Consider before Debt Consolidation

Although debt consolidation is a great way to manage your old loans, you have to be smart to create a plan that works. Here are a few things you must consider before opting for debt consolidation:

  • Can you manage the instalments? If you have taken a personal loan for debt consolidation, make sure that you can manage your monthly instalments.
  • What is the size of your debt? Calculate the size of your debt accurately. This is the only way to understand how much credit you can get that you can manage. 
  • Are you able to reduce the size of the debt? This is possible only when you cut on expenses and pay your debts. 
  • How is your credit score? Having a good credit score will ensure that you have lower interest rates on the personal loan. Otherwise, it can get difficult for you. 

Requirements to apply for a debt consolidation loan 

Whether you want to apply for loan online or in the nearest bank, the following are the requirements:  

  • Proof of bank deposits of salary for last three months 
  • Proof of income
  • Age should be 18 years or above
  • Proof of residence

Debt Consolidation: Frequently Asked Questions

  • When is the best time for initiating debt consolidation?

If you find that your monthly bill payments are more than you can afford, you must get debt consolidation. 

  • How does debt consolidation work?

Debt consolidation combines all your smaller loans under one account. This makes it easier for you to repay your debt. 

  • Do I have to settle my debts or will the lender settle them for me?

If you have credit from a lender that handles debt settlement, the lender will settle it on your behalf. But if you have taken a personal loan, it is your responsibility. 

  • How do I know that I qualify for debt consolidation?

Based on your income, credit score, and other factors, your eligibility for debt consolidation will be determined. Don’t forget to compare different lenders to find the best one.

  • Debt is someone else’s name. Can I consolidate it?

No! You can consolidate a debt that is in your name only. 

  • Can I improve my credit score with debt consolidation? 

Debt consolidation will improve your credit score in the short term. But if you want to improve your credit score, in the long run, don’t default on paying your debts. 

If you want to know more about debt consolidation loans or short-term loans, get in touch with us at Snappy Loan. We are a premier website in South Africa that will connect you with the right lenders in the country