Five tips for getting a loan approved

Fashion, funerals, electronic goods, lifestyle upgrades and home improvements are the top five motivating factors for taking out a personal loan in South Africa.

This is according to consumer insights recently collected by African Bank.

“During our application process our customers declare what their needs are when taking out a loan,” said Alfred Ramosedi, African Bank group executive: sales and marketing.

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Ramosedi said it is important to realise that getting a personal loan approved is not always the easiest process and many banks are tightening up their lending rules.

Five useful tips for those considering approaching a bank for a loan:

• Understand your preferences. Before heading to your bank, check out loan packages online and see what competitors are offering. You need to be aware of what kind of loan you are looking for, the terms you can reasonably afford, and your goal for paying off the loan as fast as possible.
• Ask questions. When you find the loan package you are most interested in, contact the bank directly to find out up front what the requirements are for loan eligibility. Banks have different requirements and it is important to know what they are so you can be prepared.
• Know your limitations. If you are taking out a loan, you should already be aware of your credit history and current score. Try and plan ahead and only apply for the loan based on your financial ability to make repayments.
• Create a checklist. Based on the information from the bank, it is wise to create a checklist of the appropriate documentation needed for the loan application.
• Don’t be in a rush. Applying for a loan when you are in a hurry is never a good idea. The approval of your loan may take time and if it is a personal loan, the lender might want to know how you plan to use the cash, for example, you may need it for home improvements or debt consolidation.