What is the qualification criterium?
Before lenders grant you credit, they will do an assessment to see if you will be able to repay the loan. Your age, employment status, affordability, and credit payment history are some of the factors that determine whether you qualify for a loan or not.
Age: Credit providers do not issue a loan to someone who is younger than 18 years old or older than 65. But the maximum age varies with each credit provider.
Employment status: To qualify for a loan, you must have proof of your income and bring bank statements that correspond with your payslip. The creditors will confirm your employment and check if your place of work indeed exists. Self-employed individuals and pensioners can also apply. Your employment contract (permanent or temporary) will affect the amount and term your creditors will grant you.
Affordability: If your expenses and debt exceeds your income, you have no chance of qualifying for a personal loan. To get an idea of your expenses, your creditor will look at your bank statements to see how much goes off per month. Creditors will also look at your payslip for deductions – such as insurance and medical aid – to access how much you take home after those deductions.
Credit payment history: Your credit behaviour is very important because it shows the risk that you pose to the creditors. If you miss your payments, pay late, or have a judgement against you, your credit score will drop. A low credit score means you will either not qualify for a loan or qualify for a smaller loan and pay higher interest rates.
You can get up to R250,000 for a personal loan, depending on your credit provider and the factors listed above. Many personal loans are unsecured, which means they are not backed by assets and therefore they have higher interest rates than secured loans.
Personal loans can help you achieve your dreams. They give you access to quick cash when an emergency strikes. However, if your credit rating is not good, this might not be a good idea as you will incur higher interest rates. People with a healthier credit record get lower interest rates.
If you are struggling to pay your debts, you can consolidate them with one personal loan or through debt counselling. This will help you decrease your instalments, giving you extra cash and breathing space.
For more information on personal loans see our guide below.