Personal loans are categorised as general purpose loans. You can usually use the funds at your discretion, although some lender will restrict with what you do with your money, They are often come up with strict qualification requirements and their own unique rules.
So the question arises, why to take a personal loan? You can take personal loans South Africa to pay off your credit card debts or for purchasing new appliances for your wedding or and event. In other words, you can take personal loans to fulfil your economic liabilities.
In this article, we will discuss the basics of personal loans in great detail.
- Personal Loans are Unsecured
When you take out a personal loan, you are not required to place an asset as collateral. So, the lender can’t automatically take a piece of your property if you are unable to pay the instalments on time.
- Fixed Amount
The amount of personal loan ranges anywhere from $1000 to $50000, depending on your lender, your income, your other debts and your credit score. The better your credit score and the higher the income, the more money you can borrow.
- Fixed Interest Rate
The interest rate on a personal loan is usually locked. It doesn’t change for the life of the loans. Interest rates on loans are based on your credit score. Generally, the better your credit score, lower your interest rates.
- Other Common Fees
Virtually every lender would charge late fees if your payment falls behind. Origination fees can run from 1-6% of the amount you’re borrowing. These fees also depend on your credit score.
- Fixed Repayment Period
You will have set a period of time to repay your personal loan. Loan period is usually stated in months. Longer repayments period lower your monthly loan repayment amount but you’ll also pay more in interest than if you had shorter repayment because interest rate in added on pr payment.
A multitude of lenders offer personal loans and terms and conditions can vary significantly between them. Banks and credit unions tend to offer good rates but online lenders even offer better terms. Your credit score plays an important role when you apply for a loan. Check out here to learn whether personal loans help or hurt your credit score in great detail.