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12 Superb Personal Loan Tips

While a personal loan may have been something you would never have needed or considered before, times have suddenly changed. With the economy in such a bad state due to Covid-19 and so many households losing an income many people in South Africa are considering taking out a personal loan to make ends meet until they can get back on their feet again.

Even people that have money put away for emergencies would probably not have been prepared enough for the economical impact of the pandemic that hit at the beginning of 2020.

While taking out a personal loan may seem like the best way to meet all your financial obligations right now it is important to ensure that you are not getting yourself into deeper trouble in the long term.

This post covers all the important aspects of taking out a personal loan that you need to consider before applying for one and all the things you need to look at to make the best choice of loan to apply for.

***Disclosure -The links in this post may contain affiliate links and I may receive a small commission if you make a purchase after clicking on a link.*** 

12 Superb Personal Loan TIps

Personal Loan Tips

Investigate Other Options

While taking out a personal loan may feel like the only option you have available take some time to consider if there are any other ways of getting through this rocky period without taking out a loan.

There are many great benefits to taking out a loan but putting yourself in debt is not always the best idea.

See if there is anything that you can sell that you don’t need right now. It is a great time to declutter your home and the market for quality second hand goods is great right now since so many people are also struggling and may not be able to buy things new.

If you have two vehicles in your household you may be able to sell one and get away with sharing a car, especially if you are no longer both working.

You may be surprised how far you can go without taking out a loan to get by.

Shop Around For The Best Deal

Not all loans are equal, so do your homework and find out what each bank is offering. Work out how much money you need to get by and how long you will be able to take to pay it back and then start checking what each bank offers.

Make a list of each bank, how much the loan is, what the repayment amounts will be, the interest rates and the time to pay it back.

Once you have all of this information consider contacting your bank and make an appointment with a banking consultant to discuss your options. Your bank may not at first have the best options available but you have a banking history with them and it is nice to keep all of your finances in one place. If you show your banking consultant that you have done your homework they may be able to offer you a really good deal. Keep in mind they will want to keep all of your business.

Personal Loan Fine Print

Pay Attention To The Small Print

Whenever you sign a contract you must always check the small print and taking out a personal loan is no different. Things to look out for are origination fees (often 0 to 5%), late fees and early payment fees.

Be very wary of any financial institution that charges an upfront payment for processing a loan and companies that do not do any credit checks.

Pay Attention To Early Repayment Charges

Paying off debt should always be a top priority so if you will be able to pay back your loan earlier than the required time frame make sure that you know what the repayment fees are ahead of time. You will always be allowed to pay back your loan early but chances are you will be charged early repayment fees.

It is always a good idea to factor this in when comparing loan companies before taking out your loan.

Calculate Personal Loan

The Importance Of Interest Rates and Repayment Terms

So many people get fixated on the amount of money that needs to be paid back each month, which is important, you need to make sure that you can pay back the minimum amount each month. However the really important part is the interest rate – you need to find the personal loan that offers the best interest rate to ensure that you pay back  the least amount of interest overall.

When comparing loans look at the total amount of interest that you will need to pay back for each one and what the repayment terms are.

Only Apply For One Loan At A Time

When you apply for a loan this leaves a footprint on your credit record which is what lenders check when you apply for a loan. Applying for too many loans at once will make you look desperate and will lessen your chances of being approved for a loan.

Instead do your research into as many financial institutions as possible and compare each loan available, decide which one looks the most appealing to you and then ensure that you meet all the requirements for that loan before applying. Make sure that you have a very good chance of being approved for that loan.

Apply for the loan that you are most interested in and wait for approval or rejection before applying for another loan.

Personal Loan Agreement

Make Sure To Apply For Payment Protection

Payment Protection Insurance (PPI) is absolutely essential when taking out a loan of any kind, it is insurance to cover you in case you are unable to pay back your personal loan. This will cover you in certain instances such as if you lose your job or if you die before the loan is repaid.

You can take out Payment Protection Insurance from loan provider but very often you will get a much better deal by taking out insurance from another insurance provider so make sure to do your homework when it comes to the cost as well as what is covered and what is excluded.

Check Your Credit Rating

It is absolutely essential to check your credit rating before applying for a loan so that you can see if there are any possible challenges to getting approved for a loan. If your credit record is not in good shape this will affect your loan application and applying for a loan when your credit history is not good will further impede your chances of getting a loan approval in future.

It is best to see exactly where you are and sort out any problems with your credit rating before making a personal loan application.

Credit Rating

Borrowing More Than You Need

While borrowing the right amount of money that you will need to see you through seems like the wiser choice it may be a better idea to borrow more than you need due to the fact that the bigger loans often come with a much lower interest rate.

It may be worth your while to see how the bigger loans are structured to see if it will actually pay you to borrow more money than you need.

Consider A Credit Card

If you are needing a small amount to get by it may be better to get a credit card rather than take out a personal loan. A credit card is cheaper and it will be easier to be approved for a credit card than a large loan amount.

A credit card may be a much better option depending on your circumstances and the fact that you will be less in debt is always a good thing.

Credit Card

Know The Risks Of Secured Loans

A secured loan is a personal loan that is backed by financial assets that you own such as your car or your home. If you are unable to repay your loan then the asset will be used to repay the loan.

A secured loan is much cheaper than an unsecured loan but you run the risk of losing your home if you are unable to meet your payments. Make sure that you are fully aware of all the risks associated with this type of loan. A secured loan is risky for the borrower and less risky for the lender.

Make Your Loan An Investment Into Your Future

Jobs are going to be scarce for a long time to come. Many businesses have gone under since the start of the pandemic and many more will fold in the upcoming months. If you have lost your job or your business this is a fantastic time to make use of your time at home and if you take out a loan you need to ensure that you are able to pay it back.

Consider learning how to make an income online and build a sustainable online business in the months to come. There are many benefits to working online from home and this is the perfect time to get into it.

The first thing you need to do is find a trustworthy and reliable place to learn how to build your own website, gain traffic and then monetize it. I highly recommend that you join this website where I have been a member since 2015 – where you will receive not only step by step training and support while you build your online business, you will also have me as your personal coach if you are a Premium member.

2020 is definitely the year to look at doing things differently, especially when it comes to our finances and the ways that we earn an income.

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  1. These are all great tips. We often neglect to read properly between the lines and the text written in small size. That can be so misleading and have so many terms and conditions. Early Repayment charges is also a very good point to consider. We wanted to pay higher amount towards our home mortgage but there is a limitation or a cap to it and if we pay higher than that, it will cost us a bit more.

  2. Melissa Jiggetts

    These are some great tips! You have included some very important steps, manly shopping around and paying attention to the fine print. With a decision as important as a loan, it is important to first make sure you get the best deal, and second, make sure you fully understand what you are agreeing to. We often rush into things when we feel pressured and regret it later so I appreciate this information. Thanks!

    • Yes Melissa, I think when people get into a panic about finances and need to take out a loan quickly they can often miss something important that they have to pay for at a later stage. Even if it is an emergency it is important not to rush this procedure.

  3. Hi Lynne,

    I really wish I came across your article a while ago because I am still paying off loans and credit cards from ages ago. You have some really good advice that if I had about 2 years ago I would not be in the predicament I am in right now.

    Thank you for sharing and keep up the amazing work on your website.

    All the best,


    • Lynne Huysamen

      It’s so easy to see these things in hindsight right Tom? I have also made plenty of mistakes taking out a loan… and I am still paying for some of those mistakes.

  4. I learned something new. Never knew that credit cards charge less than personal loans – always thought the contrary.
    Yet great tips. Very helpful for those of us who need a loan.

  5. Amazing personal loan tips. I enjoyed reading this post and learning about these amazing tips and tricking online, especially the small print which we tend to forget/ignore the most! And this is the small writing that often gets us into big troubles! So please please be careful guys. I wouldn’t get a loan until it came to life and death situation, Do you get me what I mean. If you absolutely have to get it then please these handy tips on this lovely post.

    All the very best to you.

    • Lynne Huysamen

      Habib I totally get what you mean, especially in times like this when everything is so uncertain. Yes taking a loan out can get you out of trouble in the now, but it is so important to ensure that you are able to pay it back timeously and that you don’t get yourself into a worse off position later.

  6. Hello Lynne,

    This is such a timely post. During this crisis with COVID-19, there are so many people who are facing financial stress due to layoff, their businesses get fewer customers, etc. So, applying to a personal loan would be one of the solutions they need in order to stay afloat.
    I haven’t applied for any loans yet but it is great to educate myself about it. Thank you so much for your practical tips. I will especially pay attention to the small prints that often get overlooked by many people. Read read read first before we sign on any agreement, that will save us the headache with legal problems that we might face in the future.
    Once again thank you for sharing.


    • Lynne Huysamen

      Yes times are really tough for so many people right now and a loan may be the only option left for many.

  7. I used to work for a huge financial company over a decade, many years ago. I have seen people rushing to bury themselves deep in trouble by either not reading through the fine prints, or not making the slightest effort to really understand the small details, which sometimes make a pretty big difference. And, as with everything else, there is such a wide range of offers nowadays, that people usually do not even know how to start comparing them. Thanks to your excellent (and I mean excellent) post, many will have now a very solid starting point to do so, so they can ensure they actually are making the best choice for themselves.
    A very readable article, fully packed with better and better advices-well done!

    • Lynne Huysamen

      I’m so glad you enjoyed this article Minaher, as someone that has taken out way too many loans in the past and not followed all these points I have learned the hard way!

  8. Hi Lynne. This was very interesting for me to read considering working at a bank. These tips are good and one should always keep it in mind. I think I still need a credit card however lol

  9. Personal Loans are something that everyone deals with at some stage or the other in their lives. With the plethora of options available, one may get mired in the jargon and marketing hype. But selecting the best one is important and these tips are great to separate the chaff from the wheat. The devil usually lies in the small print, and it is really important to understand them clearly before opting for the loan.

  10. Agnieszka Wajs

    Thanks for this informative post!
    I just applied for a credit card as they offer lower interest rates for longer period of time due to the current situation.
    Hopefully the credit card will be enough to cope with our financial problems and I won’t need to apply for the loan. But I will definitely keep this article in mind in case my situation changes.
    Keep up the good work!

    • Lynne Huysamen

      If you can get by with a credit card rather than a loan that would really be the better option – I hope that works out for you.

  11. Very good tips, Lynne. And yes, not all loans are created the same. There’s so much to investigate and do the due diligence for when borrowing money as it is a commitment one has to keep up in terms of repayment. Disposing off via decluttering is a great tip and yes, very true about how far one can get without actually borrowing the money. At the very least, minimize the loan amount. That’s exactly what we did when we needed a housing loan. While getting the loan wasn’t the issue, we had to think long and hard about whether we would be able to afford the monthly repayments.

    • Lynne Huysamen

      Yes I agree, you can often make a lot of progress getting creative and making another plan before opting for a loan!

  12. These are all really great ideas something one dosent think about at the time of borrowing its stress and I need this money now!! I love the part about the fine print thats something im sure majority miss when taking out a loan.

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