Are you in need of fast cash? If so, a personal loan is a perfect solution for you.
Personal loans are a popular financing option in South Africa. In fact, roughly 25 million South African adults take out loans from a financial institution. For millions of South Africans, personal loans are the vehicle of choice to quick cash.
Read on to learn how to get approved for a personal loan. Explore 5 vital tips for securing a personal loan.
1. Meeting the Eligibility Requirements
Each bank has different eligibility requirements. Before you waste time filling out an application, make sure that you meet all of the eligibility requirements.
For example, you may need to prove South African citizenship for loan approval. Another common eligibility requirement is being aged 21 or older. Lastly, most banks require that you earn a steady income and may set an annual income threshold.
2. Avoid Hidden Fees
Banks earn money by applying an interest rate to the loan’s principal value. Look to avoid any bank or financial institution that charges hidden fees.
You have the responsibility to read the fine print. Make sure to carefully read the terms and conditions of any agreement before signing.
3. Research Your Credit History
Poor credit history can hurt your ability to secure a personal loan. Banks and other financial institutions do not want to loan money to individuals who pose a risk of default.
The lender may deny an application if you are blacklisted or under debt review. For this reason, it is wise to research your credit history several months before applying for a personal loan. This gives you an extended opportunity to improve your credit history before applying.
4. How to Shop for the Best Deal
It is a wise move to shop around for the best deal. Assuming the loan’s principal value is the same, there are a few variables that affect the monthly payment.
The first variable is the Annual Percentage Rate (APR), which in layman’s terms is the interest rate. The lower the APR, the lower your monthly payment will be.
You should shop around for the best possible interest. Your credit history does have an impact on the interest rate offered by the lender. You will secure a more favorable interest rate if you are creditworthy and have few bad remarks in your credit history.
5. Find a Cosigner
One way in which lenders mitigate the risk of default is adding a cosigner to the loan. This is someone that assumes responsibility for the loan in the event that you stop making payments.
As long as you make timely payments, the cosigner has no responsibility on the loan. Applicants typically ask family members or close friends to cosign a personal loan.
How to Get Approved for a Personal Loan – Wrapping It Up
Millions of South Africans have personal loans. They are a great vehicle to acquire fast cash.
There are a number of tips that will increase your odds of approval. Steps like researching your credit history or getting a cosigner are certain to help your chances.
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