Thinking of applying for a personal loan?
Personal loans are popular because they are flexible and easier to manage. For instance, you can use a personal loan to help fund almost anything: furthering your studies, buying a new car or a house, renovations, or even going on a small holiday, if that's an option. Today, most people find a personal loan useful for this sort of thing.
So, does a personal loan sound like something that could help you?
Before you apply for a personal loan or any type of loan for that matter, you need to consider a few things. Taking these points into account will make your application easier and more likely to be approved.
Here are a few tips to consider before you apply for your loan.
- Ask yourself: "Why do I need a personal loan?"
As much as a personal loan is a means to achieving your goal, it's also a monthly expense that you will have to budget for. This is why it's important to have a strong reason for applying for a personal loan in the first place. Taking out a personal loan to further your studies, pay for medical emergencies, or even start a business, are generally good reasons because these things can provide long-term benefits. Avoid using a personal loan to pay off credit cards and other debt, for example, as this will only add to your overall debt.
- Check your credit score
It will be harder to successfully apply for a personal loan if your credit score is low. Lenders prefer clients with high credit scores because they are more likely to pay back the loan. But don't lose hope — through financial discipline, you can improve your credit score. Start by downloading your Credit Report (it's free!).
Loans come in various forms, with different repayment terms, application processes, and costs. It's a good idea to shop around before deciding on a loan. First, make sure that you're borrowing from a legitimate institution, like a bank. Next, consider the costs, such as repayments and interest, and how your budget can cover them. Don't forget to take into account your current financial obligations, such as your rent, water and lights, and insurance.
- Don't apply for more than one loan
It's never a good idea to apply for multiple loans at the same time. Not only do multiple lines of credit hurt your credit score, but it becomes difficult to manage your budget and payment obligations. It can be tempting, especially if you're trying to pay off multiple debts, but, in the long run, it'll cause more panic and stress. Instead, focus on managing your current loan and building healthy financial habits for the future.
We want you to succeed!
If managed responsibly, a personal loan can really help you create the life you always wanted. At African Bank, you can apply for a loan of up to R250 000. Find out more about our terms, fixed repayments, and flexible terms here.