Personal loans in South Africa 2024

 

A personal loan is an amount of money you can borrow for a variety of purposes, like debt consolidation, to fund a property upgrade, to buy new appliances, or even just to get yourself into a better position for the future by paying for your studies.

 

Which South African banks are the best for personal loans?

 

There is no definitive answer to which bank is the best for personal loans, as different banks may offer different interest rates, fees, terms, and benefits depending on your personal and financial situation. 

However, here are some of the banks that are popular or trending in South Africa for personal loans:

African Bank:

This bank offers personal loans of up to R250 000 with flexible repayment terms of up to 84 months. 

It also has an option called “Choose your Break”, which allows you to skip one monthly payment once a year. 

African Bank offers a interest rate starting from 15% per annum, personalised to your risk profile.

 

FNB: (First National Bank)

This bank offers personal loans of up to R300 000 with repayment terms of up to 60 months. It also has a feature called “January Pause”, which gives you a break from paying your installment every January. 

FNB's interest rates starts from 10.5% per annum.

 

Nedbank:

This bank offers personal loans of up to R300 000 with repayment terms of up to 72 months. It also has a credit protection plan that covers your debt in case of death, disability, or retrenchment. 

Nedbank's interest rates that starts from 10.5% per annum.

 

Capitec: 

This bank offers personal loans of up to R250 000 with repayment terms of up to 84 months. It also has a free retrenchment and death cover that pays your outstanding balance in case of these events. 

Capitec's interest rates that starts from 12.9% per annum.

 

Absa: 

This bank offers personal loans of up to R350 000 with repayment terms of up to 84 months. It also has a credit protection plan that covers your debt in case of death, disability, critical illness, or retrenchment. 

Absa's interest rates that starts from 10% per annum.

These are just some of the bank options available for personal loans in South Africa. 

What is the easiest company to get a personal loan?

 

Different companies may have different eligibility criteria, application processes, and approval times. However,  here are some of the factors that may affect how easy it is to get a personal loan from a company:

Your credit score: Your credit score is a gauge of your creditworthiness, or how likely you are to repay your debt on time. A higher credit score can improve your chances of getting approved for a personal loan, as well as getting a lower interest rate and better terms. 

A lower credit score can make it harder to qualify for a personal loan, or result in a higher interest rate and fees. You can check your credit score for free once a year by applying for a Credit Report.

Your affordability: Your income and expenses are another indicator of your ability to repay your loan. A higher income and lower expenses can show that you have enough cash flow to cover your loan repayments, while a lower income and higher expenses can raise doubts about your affordability. You may need to provide proof of your income and expenses, such as bank statements and payslips.

The loan amount and term: The loan amount and term are the two main factors that determine your monthly repayments. 

A higher loan amount and a longer term can increase your total cost of borrowing, while a lower loan amount and a shorter term can reduce it. 

The loan amount and term also affect how easy it is to get a personal loan, as some companies may have minimum or maximum limits on how much they can lend and for how long. You should always borrow only what you need and can afford to repay, and choose a term that suits your budget and goals.

The company’s reputation and customer service: The company’s reputation and customer service are also important aspects to consider when looking for a personal loan. You want to deal with a trustworthy company. The company needs to be transparent, and responsive, with a smooth and hassle-free application and repayment process. 

You can check the company’s reputation and customer service by reading online reviews, ratings, and testimonials from previous or current customers, or by contacting them directly to ask questions or get clarifications.

 

How do I apply for a personal loan?

 

The process of applying for a personal loan may vary depending on the lender and your personal and financial situation. However, here are some general steps that you can follow to apply for a personal loan:

1. Compare the offers from different banks and lenders before applying for a loan, as the interest rate and other fees may vary depending on your credit score, income, and other factors. 
2. Before taking on a personal loan, you should be sure that you can afford the monthly repayments and that you understand the terms and conditions of the loan agreement. 
3. A personal loan can be a tool to finance your needs, but it can also be a source of debt and stress if not managed properly. Please use it responsibly and wisely.
4. Assess your budget: Before applying for a personal loan, you should have a clear idea of how much you need to borrow and how much you can afford to repay. 
5. Use a loan calculator to estimate your monthly repayments and total cost of borrowing based on different loan amounts, interest rates, and terms.
6. Check your credit: Your credit score and history are important factors that lenders use to determine your eligibility, interest rate, and terms for a personal loan. You should check your credit report for free once a year by applying for a Credit Report and make sure there are no errors or negative marks that could affect your chances of getting approved. You should also try to improve your credit score by paying your accounts on time, keeping your credit utilization low, and avoiding new debt.
7. Apply for pre-qualification: Pre-qualification is a process where you provide some basic information to a lender and they perform a soft credit inquiry to give you an estimate of the loan offer you may qualify for. Pre-qualification does not affect your credit score and does not guarantee approval, but it can help you compare different loan offers and narrow down your options. You can apply for pre-qualification online or over the phone with multiple lenders without any obligation.
8. Compare loan offers: Once you have pre-qualified with different lenders, you should compare their loan offers and choose the one that best suits your needs and budget. You should look at the interest rate, fees, term, monthly repayment, and total cost of borrowing of each loan offer and see which one offers you the best value. 
9. Apply: After you have chosen the best loan offer for you, you can proceed to apply for the loan. You will need to fill out a formal application form and provide more details and documents to the lender, such as your ID, proof of income, bank statements, and credit report. The lender will then perform a hard credit inquiry, which will affect your credit score slightly, and verify your information and eligibility. The lender will then approve or reject your loan application and inform you of their decision.
10. Finalize your personal loan: If your loan application is approved, you will need to sign the loan agreement and accept the terms and conditions of the loan. The lender will then disburse the loan amount to your bank account or to the creditor you want to pay off, depending on the purpose of your loan. You will then start making monthly repayments to the lender until you have paid your loan in full.

These are the general steps of applying for a personal loan. Please use it responsibly and wisely.