Types Of Personal Loans in South Africa
Personal Loans in South Africa – While applying for a loan in South Africa, it is significant to find the correct type.
For instance, if you have an urgent need of cash for your one-month expenses, choosing a short term loan would make a better option.
South African lenders offer you different types of loans with various interest rates and numerous repayment terms. There are two main types of personal loans in South Africa: Secured Loans and Unsecured Loans.
Secured Personal Loans in South Africa
Secure Loan is type of loan which is supported by collateral from the borrower. Since it reduces the risk for the lender, that type of African loans may come up with lower interest rates, but, you should be prepared to lose your asset if you are unable to repay.
Vehicle finance and home loans are two subcategories of that kind of loan. You can use your car or house as collateral to borrow cash with low interest rates which depend on your income, financial status, and credit rating.Car loans’ repayment period usually lasts from 1 year up to 5 years while home loans can be repaid within 20 to 30 years. Generally, the average home loan interest rate in South Africa is 10%.
Unsecured Personal Loans in South Africa
To receive an unsecured loan, you do not have to show your asset as collateral. Since that makes the situation more risky for the lender, that kind of loan has a higher interest rate. Student loans, payday loans, and short term loans belong to the unsecured debt category.
In South Africa, all banks and government agencies offer student loans to provide financial support to students. Repayment of that loan start after graduation and borrowers should pay in 3 to 6 months gap to look for a job.
Payday loans can be using to pay some emergency expenses such as your tuition fees, transportation, rent, and bills. That kind of loans are very high interest rate. Which can top approximately 30-50% more than the amount you borrow and they are require to pay within a month.
Debt Consolidation Loans
If you are struggling with many debts, a debt consolidation loan may help you to pay off your multiple debts. Debt consolidation loan groups all your current loans into one piece which makes managing and repaying that debt easier. But, how does it work? A debt consolidation company pays off all your loans. You will have to repay them with different terms and rates which are more flexible.