There is nothing wrong or to be ashamed about with taking out a loan. The cost of living is always rising, and here in South Africa, it is no different. The big problem arises, not just because of the cost of living increasing, but with the fact that salaries do not rise by the same amount. 
It means that even if you can just about get by today, you may not be able to do so tomorrow. For many South Africans, saving is a luxury that they can’t afford, and this means that when an unexpected cost or bill lands on your doorstep, you could find yourself in big trouble.
If you don’t have the means to pay for say a toilet or a boiler repair or replacement in your home, what can you do? You can’t do without the broken-down device, and you can’t afford to fix it. The answer, of course, is to take out a loan. However, taking out a loan can be for something fun that you want, if you consider it carefully. For example, you may be thinking about financing a boat because buying may require a lot of initial capital, if you think about your expense and whether you can make the repayments there’s nothing wrong with this loan.
The difficulty that people face when they take loans out, is that they then run into trouble making on-time repayments. Sometimes this panics them into seeking more loans such as debt consolidation loans to deal with the situation, but this can turn out to be the thin end of the wedge. Once you get onto this slippery slope, it’s hard to get off again.
The most important thing when considering taking out any sort of loan is to do your comparison research properly before you take any action. There are a wide variety of different types of loans out there, and it’s important to choose the right one according to your personal financial circumstances.
For many South Africans, the possibility of taking out a bank loan is a no-no. According to the Just Money website, 32% of people in SA don’t have bank accounts, and when it comes to getting a loan, that is not a good place to start.
According to ICT analyst Arthur Goldstuck, who is also the Chief Executive Officer of World Wide Worx, a lot of those without bank accounts cannot even afford the first stage of opening an account. This opening process is something called “onboarding“, and it entails physically going to a bank’s branch to complete an application form.
Even those South Africans who do have bank accounts are often not happy, and they are looking for alternatives. One of the reasons most cited for this trend is that people feel banks charges too much by way of fees. It is leading to a new breed of “upstart” banks who are ready to take on the establishment.
Whoever you decide to apply to for a loan, as mentioned before; do your research carefully. The lender you choose should be established and reliable. Don’t pick the first one you come across. Check out several, and when you have a list of potential lenders you feel confident about, then check out the loan products they are offering.
Generally speaking, the shorter the repayment period, the better. But you still have to check out the interest rates they all charge. Things like payday loans charge high financial interest but as the repayment periods are short (typically just a few days) the total amount of interest you repay may be less than a longer-term loan with a lower interest rate.
So, do your research well and then before you sign on the dotted line; make sure you are borrowing responsibly.
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