The Number One Secret to Get a Loan
Written by Staff Writer on November 6, 2017
At some point in your life, you’re going to need to get a loan. Whether it’s to buy a house, or a car, pay for your studies or to treat yourself, you’re going to want to ask the bank for money.
After home loans and car loans, the most popular loan is a Personal Loan. These loans are given to you by a lender and you can spend the money however you wish. In South Africa, you can apply for a personal loan from R500 up to R150 000 (and sometimes even up to R200 000), as long as you can prove to the banks that you can repay your loan.
The Number One Secret to getting a loan
With over 11 million people in South Africa who are already credit-impaired, you’ve got to prove to lenders that you can afford to make the repayments. In terms of the National Credit Act, lenders need to ensure that you’re not over-extending yourself and putting yourself in a bad financial position.
So how do you prove to lenders that you can afford to make payments?
1. Make sure you have a good credit score: Your credit score shows the banks how well you deal with debt. The higher your score the better your chances of paying back the loan – so make sure you’ve got a good score. You increase your score by paying your accounts on time, and making sure you don’t have bounced debit orders. You can get a free score report from any bureau once a year.
2. Make sure you ask for a reasonable loan amount: It’s no use asking for a R100 000 loan if you only earn R5000 per month. Why? Well, you won’t be able to afford it – and so your loan application will be declined! The general rule of thumb is that the loan you ask for shouldn’t be more than 4 times your monthly salary. If you earn R3000 a month, don’t ask for more than R12 000.
3. Shop around for the best quote and terms: Just because you bank at ABC Bank doesn’t mean you are only allowed to take a loan from ABC Bank. You can get a loan from any lender, as long as they’re registered with the National Credit Regulator. Make sure to compare the interest rates offered at each lender, as well as the length of paying off the loan.
One of the most popular ways to apply for a loan these days is to use a Loans Aggregator. These are websites that automatically search multiple lenders for you, to ensure that you get the best loan at the best interest rate. You only have to fill in the application form once and they submit it to multiple lenders for you!