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The recent rise in VAT and the rise in the highest gasoline prices have put South Africans under increasing financial pressure and a loan may seem like an attractive option for fill the financial gaps. Unscrupulous lenders can have disastrous consequences on a person's financial well-being and consumers are advised to exercise caution when looking for a loan
"Renowned lenders can offer a invaluable service, "says Taryn Schmidt, Wonga SA . "But, not all lenders are created equal, and it's important to check a few crucial boxes when signing up for a loan," she advises.
Control 1: Choosing a Loan
There are different types of loans that suit different purposes, so it is important to understand what kind of loan is required.
sums of money, say more than 250,000 rand, and for longer periods, typically five years or more. Home loans are a form of secured loan, whereby the money is borrowed against the value of the property. Missing a repayment on a secured loan entails the risk of losing the badets related to the agreement. The main advantage of secured loans, other than being able to borrow more money over a longer period of time, is that the proposed interest rates are generally low and may be fixed or variable.
Of ordinary, unsecured loans are generally used for smaller amounts, R5,000 or more, and on shorter periods, say a few years. They do not require any personal good to be tied to the agreement, although not paying off the loan will still have serious consequences.
"Online short-term loans, such as Wonga loans, are also unsecured loans.This type of loan is generally for amounts of R500 up to R8,000, to be repaid over a period ranging from a few days to six months.
"According to the National Credit Act (NCA), the interest rates on these individuals Loans must be disclosed in the form of a rate of interest. monthly interest and borrowers can be charged interest not exceeding five percent per month or 30 percent over six months, "says Schmidt. "Some lenders charge lower interest charges, like Wonga, so it's better to go around the market looking for the loan that's right for you," she says.
Control 2: Making a credit check [19659004] All legal credit lenders are registered with the National Credit Regulatory Authority (NCR) and receive a National Credit Provider Number (NCRCP). Schmidt advises borrowers to check whether their chosen lender is registered, especially if interest rates or loan conditions do not match, by consulting the database of NCR lenders found on their website at www.ncr.org. za / register_of_registrants / registered_cp.php .
Borrowing from a non-registered lender entails the risk of having to pay unregulated interest rates and clients may have no legal recourse if the lender behaves illegally
Control 3: Protect Yourself
"No reputable credit provider will ever ask a customer to give him his identity card, debit card or SASSA card to keep it in any form Lenders do not do this within the confines of the NCA, "warns Schmidt
." She also advises lenders to be on the lookout for scams, the most common of which is the " Advanced Fee "or 419. In this case, people are offered large loans, regardless of the severity of their credit rating.All that is required is for the applicant to pay a fee to initiate the transfer of their loan. scammers often try to justify this payment com me an inscription or legal fees. Unfortunately, once these fees are paid, the lender often disappears and the victim never receives money.
Check 4: Is it affordable?
While the NCA requires lenders to determine whether borrowers can afford the loan, Schmidt advises people to look closely at their finances and if they can "In Wonga, we have realized that the needs of our clients have not changed, but they are looking for more affordable ways to repay their loan over time rather than a single repayment.However, many clients do not want to take out a long loan when our liquidity needs are relatively short-term Our objective is to match the loan term to the loan's usefulness so that clients can meet the repayments.For this purpose we have launched a new Flexi loan. Wonga, which distributes repayments over a period of up to six months and allows consumers to better manage their cash, according to their means, "says Schmidt.] Control 5: Read the General Terms and Conditions
The terms and conditions provided by a lender are legally binding. The items that could be included are additional fees, such as arrangement or administration fees, and it is essential for borrowers to know exactly what they are billed, over what period, and what are the legal ramifications and options in terms of default or being able to settle early without penalty.
"Our advice would be to ask questions – if the loan agreement contains jargon or clauses that are unclear, it's the right of the borrower to question them." Like any contract legally binding, it is essential that borrowers understand what they are committed to before signing, "advises Schmidt.
" Our guiding principle is to guarantee the right of everyone to a simple and fair financial choice. In the end, we understand, especially in South Africa, that people need financial solutions that will not only allow them to progress in life, but to do so safely, "says Schmidt
. checks will ensure that a client borrows from a reputable lender, at a fixed interest rate with a manageable repayment schedule. "
For more tips and tricks loans and financial information, visit www.moneyacademy.co.za
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