Understanding the Ins, Outs, and Benefits of Personal Loans
November 12, 2020
For any endeavor South Africans might have, there is likely a form of financing to help in the form of personal loans. It could be the need to consolidate some debts, money for a large purchase, or even to supplement your funds during an emergency. It is even a safe and stable way to build a good credit record.
How they work
Once you are approved for a personal loan, you will receive the funds in a lump sum. The process of approval can take a few days to a few weeks. After that, you will pay equal payments every month for the duration of your agreed-upon duration period, which can take anywhere from one to six years.
The length of the repayment period, the interest rates, and the amount of the monthly repayment can all be negotiated with your lender depending on your needs.
Personal loans generally come in two forms: secured and unsecured. Secured loans require you to put up some form of collateral, such as your home or your property. In the event that you default on your loan, the lender or bank would be able to seize the property you named as collateral.
Unsecured loans, on the other hand, do not require you to put up anything as collateral but are more stringent with their requirements. Higher credit scores are a minimum requirement, and you are also likely to have higher interest rates depending on the sum. Should you default on an unsecured loan, the bank or lender may file a lawsuit against you.
It is a perfect way to consolidate your debts
As we’ve mentioned before, debt consolidation is one of the most common reasons personal loans are taken out. You can use it to pay for multiple debts racked up on multiple credit cards, which can give you greater ease of repayment in addition to relief from collection actions.
The wonderful thing about this is that it often consolidates all these debts under lower interest rates, giving you better financial options. It also gives a clear end insight for your debts, and can help you deal with multiple sources of high-interest debt.
Better flexibility in home plans
Whether you plan to move or remodel your home, a personal loan may give you the flexibility to deal with the financial cost. It is wonderful for people who don’t have equity in their home. You would not have to worry about not having the collateral for a loan, as an unsecured personal loan can do the trick.
Long-distance moves can also be costly enough to create a dent in your finances. Such dents can be prevented with the right personal loan. It might be a more viable option than selling or leaving your furniture behind, more so than buying an entirely new set.
Final thoughts
For whatever reason you might need a boost in your finances, the personal loan is there to do the job. It can be a safer and more secure alternative to high-interest loans. The wonderful thing about them is that they are fairly accessible even to those with less-than-stellar credit ratings.
If you’re looking for a good personal loan in South Africa, send us at Hoopla Loans a message. We can help you get that money you need fast, with fair interest rates and payment plans.