Generally speaking, a South African citizen will think of getting a personal loan, when it has the scope to open up a new opportunity in their life.
A young working South African lady might decide it's time to open their new dream business. Or, an older gentleman decides it is time to get rid of the debt of his past and have a new beginning in the next two years. Both of these are opportunities that are available to any responsible person through a healthy personal loan application.
These two examples of people and their ambitions show real life situations where 2 Basic Types of Personal Loans are powerful tools. These two basic types of personal loans are:
- A Business Loan - to make a dream possible.
- Debt Consolidation - get rid of past debt through consolidating many loans into one smarter loan.
Let's explore them.
A Business Loan
Most people will require funding to get their business going. For South Africans, there are a couple of options to have a look at:
- Debt Finance
- Bank Finance
- Private Equity
- Government Funds
- Government Grants
- Venture Capital
Each of these options has elements of a personal loan in them, each having a unique set of pros and cons. Even though Venture Capital might not be an outright loan like Bank Finance, it is still a form of money loaned to you, with conditions attached. Consider a Personal Loan when the stakes of taking Venture Capital, Private Equity, etc. are higher than the interest rates and fees attached to paying back a Personal Loan.
Taking out a personal loan for Debt Consolidation involves combining many unsecured forms of debt and loans into one single loan. This loan will produce more favourable terms such as a lower interest rates and a lower monthly payment than all your individual payments combined. This can be a great move when you are serious and committed to paying off past debt through a single monthly payment. This approach is advisable to execute through a financial advisor that can help you navigate any potential pitfalls. We would recommend the following as criteria when you consider a particular loan for debt consolidation:
- Will it enable you to settle all your debts?
- Will it reduce the total current interest rates you are being charged?
- Will it reduce your total current monthly payments?
If you can answer 'For sure Yes!' to all three of these questions, it's a good sign to move forward. Your new beginning might not be as far away as you imagined!
Both of the 2 Basic Types of Personal Loans discussed above are great ways to open up new opportunities for you in life. Visit the Fincheck Personal Loan page and read through the basic guidelines below the Loan Comparison Calculator if you want to learn more on Personal Loans. Here's to new opportunities for you because of smart financial decisions!