The Types of Personal Loans in South Africa – What to KnowJul 25, 2019
In South Africa, lenders offer a myriad of loans with various repayment terms and interest rates. This opens up opportunities for people to start a business, pay off debts, fund school tuition, buy a house, purchase a vehicle, or simply pay for medical needs and other expenses – all of which may be costly and over an individual’s monthly budget.
If you’re one of those who are struggling to cover such a large sum of expenses, you may want to read on and dig deeper into the details of different loan types you can get in South Africa. In that regard, the two types are business loans and debt consolidation loans, each designed for a specific purpose.
A Business Loan: Opens up New Opportunities for People
There are thousands of dreamers any part of the world, but not many have the determination and the dough to push it through. However, those who do have the guts may find the lack of funds a paralyzing roadblock. In that regard, business loans are provided to start-ups and small-scale businesses who are ready to take it up a notch. On that note, there are different types of options for business loans:
- Debt Finance
- Bank Finance
- Private Equity
- Government Funds
- Government Grants
- Venture Capital
Each of the options has elements of a personal loan with its own set of pros and cons depending on your needs.
However, South Africa has a pioneering and accredited marketplace filled with investors ready to participate in loans, allowing those first-time venturers an opportunity to get funded. Do note that you will first have to present a fool-proof plan of your business, including exactly how much you need to borrow.
Not knowing the amount will lead to a rejected application as lenders may view it as a sign of uncertainty in your business. When you do provide a precise figure, make sure to back it up with supporting details on where you plan on spending it, how you will use it, and what are you’re expected yet realistic returns.
Debt Consolidation Loan
This is a quick fix and effective solution to those struggling to stay on top of your current debts. This short-term loan will help settle debt repayments while you get better interest rates, as well as make one monthly payment to the bank for greater flexibility and convenience.
This is highly beneficial for those who are determined to pay off past debt through a single monthly payment, allowing you more room to earn and avoid financial stress. Do be careful, however, as this type of loan contains several pitfalls you may fall into, which is why it’s in your best interest to hire a financial advisor to help you throughout the process. Also, be sure to consider the following criteria before settling for a debt consolidation loan:
- Will the debt consolidation loan realistically settle all your debts?
- Will it reduce the total current interest rates you are being charged?
- Will it reduce your total monthly payments?
If all the questions above are answered with a positively resounding “yes”, then opting for a debt consolidation loan may just be the right choice to lead you to a better and more financially stable future. If you’re looking to take out a personal loan in South Africa, Hoopla Loans is your best option. Get in touch with us today to see how we can help.