Brian Joss – Are you looking to kickstart a new business idea? Do you want to take a short course or study further to enhance your employment opportunities?
Buy a car? Maybe you need a bigger house for your growing family, or you need some extra cash for a short-term payment obligation? Any of these can be attained by applying for a loan, but it is important to apply for a loan for the right reasons.
“When you decide on a loan, your objectives on how you use the money should be clear. Using a personal loan to pay for lifestyle expenses such as a holiday, entertainment or a shopping spree is not advisable. But, borrowing money that will enhance your personal situation in the long-term even after the debt is repaid, such as education, starting a business or investing in property, are worthwhile investments,” says Lebogang Gaoaketse, WesBank’s Head of Marketing and Communication.
It is important to take the time to understand the terms and conditions of any loan you are considering. Read the small print and know what your repayment obligations are. You don’t want the line item ‘pay back loan’ to remain at the top of your monthly budget plan. Know how much debt you can afford to take on, and what the expected monthly payments will be. The primary function of a loan is to help you reach your desired goals with guidance and support.
Here are some of the loans available to you, depending on your need. In understanding each loan category, you can determine whether it is a financial commitment you are prepared to make.
Home Loan: A home loan is a major financial investment into an important asset, so make sure you understand exactly what your repayment obligations are over the agreed time period for the property. Paying an extra amount into your home loan every month will shorten the loan period and is a beneficial investment option. The extra payments offset the initial capital amount of the loan, thus saving on interest charges in the long term. Borrowing against your home loan for a major purchase, such as home renovations, is also a source of cheaper credit that you can access. If you don’t have any history of a credit score, you will not qualify to apply for a home loan. Click here to get more information about credit: https://bit.ly/mrp_jul20.
Study Loan: This loan is available to facilitate the financial study needs (tuition, residence/accommodation, textbooks and living expenses) of a student. The loan is offered generally at a lower interest rate, and the surety on the loan pays the low interest rate for a grace period, typically the duration of the student’s studies. Once the student has graduated and started working or has a secure source of income, he or she then takes over the repayment of the loan. Investing in tertiary education or other studies to improve your current situation will render lifelong benefits.
Personal Loan: A personal loan is offered to a consumer who needs to fulfil some immediate financial obligation. This loan can assist you if you are not in a position to access an emergency fund. A personal loan is best served in complementing your personal development, such as a home renovation to increase the market value of your home. A personal loan is calculated with fixed repayment amounts including interest, as determined by your lender and agreed to by yourself.
Business loan: This is a loan often used to jumpstart a business, big or small, and help it grow. Most businesses require working capital to finance initial operational functions such as overhead payments before the business starts showing a profit. Being in a position to finance any urgent capital requirements of your business will not only realise financial benefits, but also peace of mind in fulfilling the first cycle needs of the business. Once the loan is paid off, all profit realised from the business thereafter remains within the business. Obtaining financial support from an investor, as another option, would result in you having to share the profits from the business with the investor.
Vehicle Financing: Vehicle financing is a loan offered by a bank, car dealership or vehicle finance company to purchase a new or used vehicle with fixed monthly instalments over a period of time.
No matter what loan you apply for, make sure you are in a position to fulfil the repayment contract on time. Any extra money you have should be used to pay off the loan and try to cut back on other unnecessary expenses during the loan period.
“As a responsible lender, it is our duty to advise and guide our customers through the financing process, and ensure they make the best possible financial decisions in line with their current financial situation. Many people are experiencing financial constraints at the moment, so we encourage our consumers to be honest and informed when considering taking out a loan or financing,” says Gaoaketse.
CAPTION: Money makes the world go round. Picture: Motorpress
