Nicolette Dirk, finance writer, Justmoney.co.za
African Bank has launched a personal loan which is linked to the current prime lending rate, designed to offer lower pricing to financially fit customers.
Israel Skosana, head of marketing and consumer insights at African Bank said the Fixed Prime Loan offering will influence how credit providers offer value to their clients.
“Repayments on these loans will be based on the ruling lending rate, which is currently at 8.5%. This is significantly lower than the current rates on offer for unsecured loans.
These low rates are how we reward clients by giving them value for their money. Normally personal loan interest rates can be anywhere between 20 and 30 percent,” said Skosana.
According to Skosana this affordable personal loan is suited to people who can’t afford the high repayment rates of a credit card.
He added that with the affordable rate of this personal loan, there won’t be any surprises due to a change in the South African Reserve Bank's REPO rate.
Who qualifies for this loan?
Skosana said the prime loan will be targeted at the financially fit customer, who has passed their stringent affordability criteria and can demonstrate a capacity to fulfill the required monthly installments.
“Eligible customers will be able to borrow a maximum of R20 000 up to 24 months, allowing for customers to enjoy a well-priced, straight forward and uncomplicated loan,” said Skosana.
He added that they want to develop products that are designed to put the consumer in control of their finances by helping them understand that, when used responsibly, credit can be used to better their lives.
Which other banks offer similiar rates?
Arrie Rautenbach, head of Absa’s retail banking, said Absa has had a prime linked personal loan since the introduction of the National Credit Act in June 2007.
“We also offer a Revolving Loan Credit Plan linked to your cheque and transaction account. Absa's good credit risk, existing bank account customers can also get their personal loan or Revolving Loans from prime (current 8,5%),” said Rautenbach.
With FNB’s Temporary Loan your money is available immediately in your Personal Cheque Account or Smart Account.
The initiation fee is up to 13% of the loan value and the amount you qualify for is dependent on your credit profile and is subject to credit approval.