A personal loan can be a useful tool to achieve your financial goals. It can help pay for your children’s education, house renovations, and medical expenses. But can it be used as a tool to save you money?
16 February 2021 · Athenkosi Sawutana
A personal loan can be a useful tool to achieve your financial goals. It can help pay for your children’s education, house renovations, and medical expenses. But can it be used as a tool to save you money?
We chatted to financial services experts to find out.
Tip: To see whether you qualify for a personal loan, click here.
Neil Thompson, head of product and customer value proposition at African Bank, says a personal loan can indeed save you money, but only when it’s in the form of a consolidation loan.
“A consolidation loan is used to settle external debts. You can have any remaining capital paid into your bank account,” Thompson explains.
Basically, you transfer your existing loans into a single loan with a single monthly instalment. This can reduce fees, Thompson says.
According to John Manyike, head of financial education at Old Mutual, a consolidation loan can save you money and benefit you in the following ways:
Manyike points out that, as much as consolidation can save you money, it can also have disadvantages. These include:
Thompson says when it comes to managing debt and saving money, it’s worth empowering yourself with easy financial literacy courses and budget tools online, in branches and on selected financial apps.
“Saving and budgeting takes discipline and it is worth taking the time to understand it better,” says Thompson.
“However you plan to approach your finances, it is our recommendation that you always seek expert financial advice. Speak to an adviser when it comes to managing your finances and planning your financial future,” adds Manyike.
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