Personal Loans

There are broadly two types of personal loans - those that are secured and unsecured loans. A secured loan is where the lender puts up security of equivalent value for the loan, usually in the form of a personal asset that the lending party can then attach should the lender fail to repay the loan. An unsecured loan does not require that this type of security be put up. Interest is charged on personal loans, with rates varying dependent on the lender.

Personal loans are usually repaid in fixed installments over an agreed repayment period of time. The installments are calculated in advance, including the interest and other charges. In South Africa, as in most countries, a distinction needs to be drawn between the personal loans granted by major financial institutions and those from smaller entities. The latter comprises micro-lenders, which specialise in providing personal loans to individuals, which are usually non-secured. Interest rates are typically higher, and repayment schedules can be pretty onerous, so anyone approaching such an institution for a loan is advised to act cautiously.

What is more unique to South Africa, as a developing country, is a recent trend towards larger financial institutions offering unsecured loans to previously disadvantaged individuals, as part of a drive to include more people from these communities in the formal banking sector - colloquially known as banking the unbankables. This strategy is aimed at the overall upliftment on communities, and is recognition of the fact that non-access to credit severely hampers such upliftment.

South African Personal Loans Companies