As a responsible credit provider,FASTAtakes a holistic approach to each application to ensure you are able to pay your loan back in full, on time and within the agreed terms.
There are many factors that influence our decision to lend someone money. To ensure you are prepared, here are some questions you should ask yourself before applying for a personal or short term loan.
1. Why do I need a loan?
If you need a loan to cover your everyday expenses, carefully consider how you will pay it back with your other monthly expenses. Think twice if you are looking for funds to spend on non-essential things. If you have a limited income or have lots of expenses with little disposable income, lendingmoney may put you under unnecessary financialstress.
2. How much do I need?
There aredifferent types of loansavailable to you, depending on the amount you need and the repayment terms you are able to meet. Some lenders offershort term loansfor less than R500 while some offer larger sized personal loans up to R250 000. Ensure you do not apply for more than you need so that you can meet the repayment obligations you will be bound to in yourcreditagreement.
3. How long will I have to pay it back?
Usually, you will have to make your first repayment within 30 days of being granted theloan. Your loan agreement will specify therepayment termsand the date of the debit order that automatically collects your monthly instalment from your bank account.FASTA’s repayment termsare monthly over 1, 2 or 3 months.
4. How much will I pay in fees?
The ‘cost of credit’ depends on a number of factors including the lender’s service fees, interest rate, credit protection insurance and the repayment term (length of time you have to pay yourloanback in).Your credit scorealso influences the interest rate – the better your credit score, the lower the interest rate will be. Make sure you know and understand what fees will be incurred when youapply for a loan.
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5. Can I afford the monthly repayment?
When you apply for aloanyou can choose the repayment plan that works for you. Factors such as your income,expenses and available cash flow are considered before the lender approvesthe repayment plan for your loan. If the lender thinks you will be strapped for cash, your monthly repayment will be reduced or yourloan applicationwill be declined.
Always ensure you do not stretch yourself too thin by trying to pay yourloanback too soon or agree to higher monthly payments.
6. Do I have a good enough credit score?
Before you apply for yourloan it is always good to know what your creditscore is. Most lenders only consider applications from people with highercredit scores.
If you do not know what your credit score is, our partnerClearScorewill be able tell you what it is for free!
7. How will a personal loan affect my credit score?
Managing credit responsibly by paying back your loan on time and in full, within the agreed repayment term, will have apositive affect on your credit score. However, if you miss a payment or apply for too many loans within a short period of time will reduce yourcredit score.
There are five factors that are used when yourcredit scoreis calculated:
- Your payment history
- Your total amount of outstandingdebt
- The length of yourcredithistory (a record of your demonstrated ability to repay your debts)
- New debt or existingloanseg personal, home, vehicle
- Yourcreditmix (the number of and types of credit you have open)
Lenders take all of the above into consideration when youapply for a loan. So, it is important tounderstand the impact too many loanapplications or missing a repayment will have on your future applications for credit. However,using creditresponsibly will have a positive impact on your future credit applications.
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