In South Africa, there are various types of credit available to meet the needs of different individuals. A personal loan is one of the most popular credit facilities provided by financial institutions. A personal loan, unlike other credit facilities, is money that is forwarded to the debtor and is the best way to obtain liquidity on a personal level.
Depending on the bank or financial institution you choose, a personal loan can range from R5,000.00 to R500,000.00. The money available for a personal loan can be used however the debtor sees fit. As you’ve considered a personal loan to be the best credit facility for you, the next step is to choose which financial institution offers the best personal loan for you.
There are some aspects of a personal loan that you should consider when shopping for one. Applying for a personal loan that does not meet your needs can be a disadvantage. This may prevent you from successfully funding the purpose of the personal loan.
Knowing how to manoeuvre when applying for a personal loan is the best way to get a loan that truly fits your spending and loan requirements. The 6 features of a personal loan that you should look for when taking out a personal loan are discussed below.
1. Minimum and maximum loan amount
One thing to consider before taking out a personal loan is the loan amount. Before applying for a personal loan, consider the maximum and minimum loan amounts available. Some banks or financial institutions have a maximum personal loan amount that they can offer.
Personal loans from the big 5 banks have maximum loan amounts ranging from R200,000.00 to R500,000.00. If you need a personal loan in excess of R20,000.00, it is sensible to investigate the maximum amount that a lender can offer.
Lenders typically allow customers to apply for a personal loan and offer them a loan that fits their income and budget. A lender may offer a loan that is less than what a customer requires. Checking the minimum loan amount that can be applied for is a good idea so that you don’t apply for a personal loan from a financial institution that has a very low minimum loan amount.
2. Fees
Before applying for a personal loan, you should study the fees that are associated with it. Using a bank’s affordability calculator, one can get an idea of the fees associated with a personal loan.
The affordability calculator of a bank can provide information that is close to the actual amounts payable for the loan amount you require. Examine the initiation fee, monthly facility fee, and any other fees associated with the personal loan.
3. Interest rates
Obtaining a pre-qualification for a personal loan from a financial services provider is the best way to determine the interest rate that you are likely to be charged. A pre-qualification will inform you not only of the fees you are likely to pay but also of the interest rate you are likely to pay on a personal loan.
Customers need to be made aware that interest rates on personal loans can be negotiated. Customers can negotiate personal loan interest rates and receive a discount on a personal loan. A good credit score makes it easier to negotiate a lower interest rate.
4. Duration to access funds
The time frame for obtaining funds is critical. A personal loan can be used for anything, and some clients may not be in a rush to get cash. In some cases, a client requires immediate access to cash, and the time it takes to disburse funds is more important to these individuals.
Personal loans can now be issued on the same day, and financial institutions with a disbursement period of 24 to 72 hours are highly valued. Furthermore, the loan amount should be transferred to any bank account, even if it is not an in-house bank account.
5. Repayment term and flexibility
When taking out a personal loan, one of the most important factors to consider is the repayment period. The repayment period of a personal loan can determine whether you can afford the loan or whether you will become indebted as a result of it.
Personal loans have a maximum repayment period ranging from 60 to 84 months. Longer repayment periods result in a higher interest rate payable but lower monthly installments. Shorter repayment terms have higher installments but lower interest rates.
Aside from the loan term, another factor to consider is the loan’s flexibility. Personal loans may include repayment extensions and the ability to defer payments. This is useful if you are unable to make a loan repayment.
6. Customer experience
When dealing with a bank, customer service is essential, and for a personal loan with a longer repayment period, working with an institution that treats you well is essential. Banks have dedicated personal loan desks that can assist in getting a message across or having questions answered quickly.
Nowadays, having access to digital platforms is critical for simplifying banking. Customers may find it more convenient to make payments through the App. Additional benefits, such as free data or airtime, can be included if payments are made on or before the due date.
Conclusion
Aside from the loan term, another factor to consider is the loan’s flexibility. Personal loans may include repayment extensions and the ability to defer payments. This is useful if you are unable to make a loan repayment.
