Loans can offer more value than you expect
So, you have decided to apply for a loan to further your education. You have not taken out any loans from a bank before and although you only require a short term loan, you are still hesitant about whether lending money is wise.
There are many good reasons to loan money. When you fill out a personal loan application, be sure that your reasons for wanting the loan will add value to your life. Things like studies, buying a home or investing in a good opportunity are ways a loan can make a positive difference.
You can also experience things not otherwise financially possible, like visiting family overseas or sending your children to university overseas.
Simply put, a personal loan is money borrowed from a bank or other credit provider that you pay back as a fixed monthly loan repayment. A personal loan is an unsecured loan, which means it is not backed by collateral (which is what your home is when you take out a bond – the bank always has your home as security and can sell it to recover the debt, if necessary).
What if I am already in a lot of debt I am battling to pay off?
If you already have debt in the form of store cards or credit cards, you may think taking out a loan would only be adding to this. In fact, using a loan to consolidate your debt is a good move. It is, in fact, one of the most common uses for borrowing money.
Paying off debt to various creditors comes with varying balances due, interest rates and terms and conditions. You can combine all of your outstanding balances into one monthly payment with a personal loan.
Not only does this make your debt so much easier to manage each month, it also allows you to work out a realistic timeframe to pay off your debt without becoming overwhelmed.
For example, if you owe Store a R8 000, Store B R4 000 and Store C R3 500, your total debt is R15 500. You apply for a short term loan (over 12 months) of R20 000 from the bank. If your personal loan application is approved, you can use the money to pay off all your debt and then you will only have one repayment a month – the loan repayment to your bank.
Our customers can simplify their debt with a loan which allows them to bundle up to five debts into one single consolidation loan of up to R250 000 with the reward of one lower repayment!
Other common reasons for personal loans:
- Pay medical expenses
- Finance a funeral
- Pay for a wedding
- Renovate your home
- Buy a car
- Pay for studies
- Start your own business
What do I need to apply for a loan?
You must be over 18 to apply for a loan and will need to produce a recent proof of income which reflects at least three salary deposits, proof of residence not older than three months and a recent bank statement reflecting three salary deposits.
At African Bank, you can choose to repay a loan over seven to 72 months. The money is deposited straight into your bank account and you know exactly what you are repaying each month because this amount is fixed.
Many customers ask us about the inability to repay the loan for whatever reason beyond their control. What happens then?
We understand that you may suddenly find yourself in a circumstance you never planned for — permanent disability, temporary disability or retrenchment, or you may even die soon after taking the loan out. It is imperative that the financial choices you made beforehand will now not become a burden to others.
As we have already mentioned, a personal loan offers a lot more benefit than you may expect — yes, even cover for eventualities beyond your control. It is important to ask about this type of cover when applying for a loan.
The key thing to remember with a loan is that it has to be repaid within the terms and conditions of the contract you sign with the bank. Failure to do so can damage your credit record, making it hard to get credit again for anything (like a phone or car or even rent a home). The money you owe remains your debt and the longer you take to pay it off, the more interest it accumulates, increasing the amount you owe.