Personal loans in South Africa are offered in the form of secured or unsecured loans. The former requires some form of asset to be put down as collateral, while the latter don’t require any form of collateral. Personal loans are generally used for meeting personal needs, such as paying for school fees, paying for home improvements or for medical expenses.
How to ensure personal loan approval in South Africa
Know what type of loan you need. If you have a poor credit record, you may stand a better chance of personal loan approval by applying for a secured loan. Unsecured personal loans are a higher risk for lenders, so a higher interest rate is charged and these loans may be more difficult to qualify for.
Personal loan amounts may vary from as little as R100 to as much as R250 000. The loan amount you are granted will depend on your current income, expenditure, credit score and credit history. You’re more likely to qualify if you have a high income and fairly low monthly expenditure, with a good credit score. If you want to ensure personal loan approval, you should maintain a good credit score and lower your expenses.
Check your credit rating before you apply. To qualify for personal loans in South Africa, you generally need to have a high credit rating. If your credit rating is low you are more likely to pay higher interest rates. Lenders consider your affordability as an important factor during the application process. You need to be able to afford to repay the loan after covering your monthly expenses.
Compare loans from different lenders. Compare the different repayment terms, interest rates and loan amounts. Keep in mind that the shorter the loan term, the lower the total cost of the loan. When you apply make sure you submit all necessary information, to speed up the application process.